Best 5-Year CD Rates
Finding the best certificate of deposit requires taking several factors into account. We’ll compare some of the top 5-year CD rates below:
Written by
Katharine Brunotts
Kate Brunotts is a financial writer currently based in Brooklyn with a strong background in personal finance and business. She is passionate about helping readers reach their financial goals and is constantly seeking out ways to expand her financial literacy. When she's not writing, Kate enjoys spending time with her loved ones and small dog, Spicy.
Last Update on Oct 6, 2023
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If you’re looking to score higher interest rates on short to medium-length investments, a certificate of deposit might be better suited for you than a traditional savings account. These are secured, low-risk investments that can help you save more over time in exchange for liquidity: you cannot withdraw your investment until you’ve reached the end of the term.
Certificates of deposit come in various term lengths, but today we’ll focus on some of the best 5-year rates. We’ll analyze some of the top 5-year certificates and share several factors to consider before signing on for a certificate of deposit:
The Best 5-Year CD Rates
BEST OVERALL
PenFed Credit Union Money Market Certificates
Minimum Deposit
$1000
CD APY 5-Year
4.00%
Interest Compounding Frequency
Daily
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PenFed offers an excellent 5-year CD rate at 4.0% APY with daily interet compounding frequency. While other banks may offer a higher APY, it’s worth noting that PenFed allows you to change your term maturity during your contract.
With top-notch customer support nods, you can easily call PenFed to quickly access answers about your investment. Note that membership with a savings account is required to access certificates.
Pros
- Daily compounding frequency
- Convenient mobile app
- Flexible term options
Cons
- Some banks provide higher APY
- Savings account is required to access certificates
- Robust withdraw penalties
BEST FOR ONLINE-BANK CERTIFICATE
Quontic Bank Certificate of Deposit
Minimum Deposit
$500
CD APY 5-Year
4.30%
Interest Compounding Frequency
Daily
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This fully online bank provides a higher than average APY at 4.3%. The minimum deposit is fairly accessible at just $500, with notably daily compounding interest.
Quontic provides a wide range of accounts and certificates so that you can customize your investment strategy in one place. Note that you cannot deposit cash, but opening an account online takes a matter of minutes.
Pros
- Higher than average APY
- Convenient mobile app
- Easy to open an account
Cons
- No in-person branches
- Cash deposits are not permitted
- Slim term offerings
BEST FOR APY RATE
First National Bank of America Certificates of Deposit
Minimum Deposit
$1,000
CD APY 5-Year
4.65%
Interest Compounding Frequency
Quarterly
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When opting for a longer 5-year CD rate, beating the First National Bank of America’s APY rate at 4.65% is tough to come by. This impressive certificate compounds quarterly and requires an $1,000 minimum deposit.
It should be noted that physical branches are limited to a couple of locations in Michigan. However, this bank has highly rated customer service, so you can rest easy even if you’re banking from afar.
Pros
- Offers several longer-term CD rates
- High APY
- Highly-rated customer service
Cons
- Quarterly compounding frequency
- Limited in-person branch access
- Some accounts have monthly service fees
BEST FOR ENTRY-LEVEL INVESTORS
Bethpage Federal Credit Union Certificate Account
Minimum Deposit
$50
CD APY 5-Year
4.00%
Interest Compounding Frequency
Daily
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While it may not have the highest APY rate, the Bethpage 5-year certificate is a great option to consider, especially for entry-level investors with a small minimum deposit of $50. Interest is compounded daily, with a higher than average APY at 4.0% as of Fall 2023.
Applying for membership is easy, though you’ll need to open a savings account to access certificates. Fortunately, Bethpage provides a wide variety of CD options, so the insititution might also be a beneficial pick for a laddering strategy.
Pros
- Low minimum deposit
- Daily compounding
- Wide range of CD offerings
Cons
- You need membership to open an account
- Savings account is required for a certificate
- There are higher APY rates available
BEST FOR LARGER INVESTMENTS
Connexus Credit Union Share Certificate
Minimum Deposit
$5,000
CD APY 5-Year
3.91%
Interest Compounding Frequency
Quarterly
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If you’re looking to invest a bit more, you can opt for a Connexus 5-year certificate with a minimum deposit of $5,000. This bank provides 3.81% APY with a quarterly compounding interest schedule.
Connexus is insured by the NCUA, so you can be sure your investment is backed up to $250,000. It’s also known for good customer service, widely available every day of the week if you’re looking to invest with more of a personal touch.
Pros
- Convenient mobile app
- Insured by the NCUA
- Good customer service
Cons
- Lower APY
- High minimum deposit
- Quarterly compounding frequency
Overview Of 5-Year CD Rates
A 5-year CD is a secured investment product, usually with a fixed, predictable rate of return measured in APY or annual percentage yield. The higher the APY, the more you can expect to earn on your investment, but it’s important to take several other factors into account based on your individual situation.
Certificates of deposit can span several months or years, depending on the term agreement. While they offer higher rates of return than a general savings account, the money is not liquid– if you withdraw your investment prematurely, you’re likely to encounter penalties. Once a CD has matured at the end of its term, in this case 5 years, you can either withdraw the money, renew the CD, or roll it over into a new agreement.
Thanks to the APY increase seen over the course of 2022, you can expect many CD rates to be higher than the national average of 1.37%, so it’s certainly worth considering adding a certificate to your investment portfolio.
Selecting The Right 5-Year CD
Are you considering opening a 5-year certificate of deposit? Here are a couple of considerations to take into account while making your decision:
- Annual Percentage Yield (APY): Annual percentage yield represents the amount of interest you’ll earn over the course of your certificate of deposit. The higher the number, the more you can expect to earn across your term, but you should also factor in other factors like minimum deposit requirements and any fees that might be associated with opening a new account.
- Minimum Deposit Requirement: You need a minimum deposit set by the financial institution to open a certificate of deposit.This amount is required at the beginning of the term agreement.
- Additional Eligibility Requirements: Some institutions like credit unions require additional requirements like opening a savings account or paying a membership fee in order to access certificates.
- Customer Service: If you’re looking for more hands-on support with your finances, you’ll want to keep an eye on your institution’s customer service ratings. Keep in mind that several online banks are entirely online, so you might not have access to any in-person branches.
- Withdraw Period and Penalties: Most certificates auto-renew after a short grace period, so you need to keep a keen eye on your maturity date. Money that’s taken out prematurely will incur fees and additional penalties.
How Do I Open A 5-Year CD?
Once you’ve met the eligibility requirements and you’ve found the right CD for your needs, start by opening an account with your financial institution of choice. You’ll need to have your minimum deposit ready as well as any other additional capital needed to open required savings accounts or opt into credit union membership, for example.
After you’ve deposited the initial amount, you’ll be guided to sign off on the CD term. From there, it’s up to you to keep an eye on your investment. Note that many CDs automatically renew after a short grace period, so make sure you note your maturity date accordingly.
Investing In A 5-Year CD: Pros And Cons
5-year certificates of deposit present a low-risk investment that provides a higher rate of return than your traditional or high-yield savings accounts. They’re typically backed by the FDIC, meaning that they are fully backed up to $250,000. With a fixed APY, predicting your rate of return is easy and convenient.
However, certificates present a challenge when it comes to liquidity. You cannot access your income or earnings in most cases until you reach your term date. It’s imperative that you only tuck away what’s financially viable based on your personal situation– money withdrawn prematurely will result in fees that may cancel your potential earned interest entirely.
Exploring Alternatives To 5-Year CDs
5-year certificates of deposit are a great, low-risk investment option, but they’re not the only viable solution. If you’re looking for something with a bit more liquidity, you might consider a high-yield savings account for a lower interest rate. You can also consider breaking down your money into shorter-term CDs.
For longer-term investments, you could consider longer-term or jumbo CDs that expand to 10 years or longer, though note that these generally have a higher minimum deposit requirement. Government-backed savings bonds like I bonds also present a savings solution with a predictable rate of return– these bonds combine fixed and inflation-adjusted interest rates, adjusting every six months.
Frequently Asked Questions (FAQs)
What Is The Best 5-Year CD Rate Right Now?
The best 5-year CD for you depends on several factors like APY rate, providing financial institution, accessibility, and required minimum deposit. Fortunately, we’ve compared and contrasted some of the best 5-year CD rates currently available above.
What Is The Downside Of Bank CD?
The downside of any certificate of deposit is that you have to sacrifice liquidity in order to take on those higher APYs that you may not find in high-yield savings accounts. You cannot withdraw your investment or earned interest until your certificate reaches maturity.
How Much Are 5-Year CDs Paying Now?
Thanks to the rise in interest rates over the course of the past year, some 5-year CDs are paying upwards of 4.00% APY. It’s a great time to consider adding one of these investments to your portfolio.
Is A 5-Year CD Worth It?
A 5-year certificate of deposit might make a great addition to your portfolio depending on your financial situation. However, as with any investment decision, it’s important to weigh your options to find the right solution for saving your money.
Making An Informed Decision
Assessing whether a 5-year CD is a viable and prudent investment choice depends heavily on the conditions of the market and your personal financial standing. Keep in mind that CD APY rate shifts with the broader economy, so locking in a higher-than-average APY is certainly worth considering.
In any case, remember that certificates of deposit, especially those with longer-term agreements like 5 years, are not liquid– with any CD, you should be prepared to part with your investment for the full length of the term to successfully earn the predicted interest. Hopefully, this guide makes it easier for you to find the right 5-year CD for your personal financial situation.
Katharine Brunotts
Author
Kate Brunotts is a financial writer currently based in Brooklyn with a strong background in personal finance and business. She is passionate about helping readers reach their financial goals and is constantly seeking out ways to expand her financial literacy. When she's not writing, Kate enjoys spending time with her loved ones and small dog, Spicy.
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