When you open a 15-month CD, you deposit a fixed amount that is locked up for 15 months and are paid a fixed rate. The current average 15-month CD rate is 3.37% and the best high yield 15-month CD rates currently yielding 5.50%. Once the account is opened and funded, the money will sit in the account for 15 months and earn interest. When the CD matures, you can let the CD auto-renew, and the principal and earned interest will be deposited into the new CD. It is important to note that the rate may change. If you choose not to renew the CD, you can withdraw or transfer your principal and interest.
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What is an 15-month CD and how does it work?
With an 15-month CD, which is simply a deposit account that requires money to be deposited for a fixed period of time, you agree to leave your money in the CD account for the duration of the term. In return for you committing your money for that 15-month term, the bank or credit union agrees to pay you a higher rate than you would otherwise receive in a savings account or money market account. The current average yield on a 15-month CD is 3.37% and the best high-yield 15-month CD rates yielding 5.50%.
Once your money is locked in the CD account, your rate is also locked and cannot be raised or lowered until the CD matures. This is ideal for individuals who tend to be risk-averse and prefer the safety of knowing their money is secure and earning a fixed rate. Should you need to withdraw your money before the end of the term, you will most likely have to pay a substantial early withdrawal penalty. At the end of the term, the CD will generally auto-renew for the same 15-month term length, but the rate may not be the same. It is important to be aware of when your term ends, as banks will only allow a short window of 5-7 days to cancel your CD without potentially incurring early withdrawal penalties.
How do I select the best 15-month CD?
CDs are considered low-risk accounts because the rate is fixed, and if you stay within the FDIC or NCUA limits, your money is protected in case of a bank failure. Before selecting a CD, it is important to understand the following terms:
Annual Percentage Yield (APY): The total interest you receive on money in an account over the course of a year is expressed as an APY. The interest rate on an account is only one component of the APY, which also considers how frequently your interest compounds. The annual percentage yield (APY) of an account provides a more precise estimate of how much money it will earn in a year.
Minimum Required Balance: The smallest amount of money you must deposit or keep in a savings account to avoid a monthly maintenance fee.
Compound Interest: Compound interest is the interest you earn on interest you have already been paid. This may be demonstrated using simple math: if you have $100 and it generates 5% interest every year, you will have $105 at the end of the first year. You'll have $110.25 by the end of the second year, because you earned interest on the $105, and so on and so forth.
Early Withdrawal Penalty: An early withdrawal penalty is a fee banks may charge if you withdraw funds before the CD matures. Withdrawing your funds before the end of the term may cause you to forfeit a portion of your accrued interest and possibly your principal.
Here are some important factor to keep in mind when searching for a 15-month CD:
Shop around: Comparing CD rates at various banks is an easy way to find the best CD for your needs. Luckily, we've done all of the hard work for you and have brought together 9-month CDs from banks all across the country on BankGrader site. Keep in mind that you don't always have to have all of your CD accounts with the same bank, as many online banks offer higher rates than traditional banks.
Beware of early withdrawal penalties: Leaving your money in your CD for the full length of the term allows you to earn the maximum interest. Withdrawing your money early will most likely cause you to lose part or all of your interest, as banks typically charge penalties.
Pros and Cons of having a 15-month CD
| Having an early withdrawal penalty forces you to not withdraw your money and forces you to let your money grow. | A 15-month CD may offer a lower APY compared to a longer term CD. |
| The rates currently being offered on 15-month CDs are at a recent high, in some cases higher than shorter term CDs and other deposit accounts such as a high-yield savings account. | If you withdraw your money before the CD matures, you will most likely incur an early withdrawal penalty, which may cause you to lose some or all of your earned interest. |
| Your rate is locked in for 15 months. If rates go down, your rate will not change and you earn more interest. | If rates continue to rise, you will not be able to take advantage of the higher rates until your CD matures. |
| As long as you are within the FDIC or NCUA limits, your money is safe and secure for the entire 15 months. |
Alternatives to a 15-month CD
If you think you may need your money sooner than the commitment a 15-month requires, it may be beneficial to consider a shorter term CD such as a 1-year, 9-month, 6-month or 3-month CD that offers comparable yields without the longer commitment.
A savings account is a type of interest-bearing, depositary account available at banks and credit unions. Banks typically pay a variable interest on deposits but may limit the number of withdrawals per month. Unlike an 15-month CD, which ties up your money, a personal savings account is highly liquid but offers low yields.
A checking account is a form of transactional account that can be opened at a bank, traditional or online, or a credit union. Checking accounts allows you to deposit funds and then withdraw from them to pay bills or make purchases. Keep in mind that the money in your checking account is money that you intend to use in the short term to meet your daily expenses. Unlike a 15-month CD, a checking account offers a low yield, with some banks offering no yields at all.
A high-yield savings account is a form of savings account that pays a much greater interest rate than other types of savings accounts. Rates of 3.00% and higher are now available from online banks. This is the one type of account that offers yields similar or higher than a 15-month CD, with the drawback being that yields are variable and can fluctuate.
A money market account (MMA) is a type of interest-bearing savings account that also allows you to use a debit card and write checks. MMAs generally limit the number of purchases and transfers to six per month, although ATM withdrawals are typically unrestricted. In general, MMAs offer lower, variable yields than a 15-month CD.
Important terms to know
Annual Percentage Yield (APY): The total interest you receive on money in a 15-month CD over the course of a year is expressed as an APY. The interest rate on an account is only one component of the APY, which also considers how frequently your interest compounds. The annual percentage yield (APY) of an account provides a more precise estimate of how much money your 15-month CD will earn.
Minimum Opening Deposit: This is the lowest amount of money you must deposit to open your 15-month CD account.
Interest: Interest is the money you earn from depositing your cash with a bank into your 15-month CD. When you deposit money with a bank, the bank borrows it from you and will lend a portion of it to clients or other banks, and the money they pay on your 15-month CD, is the interest.
Compound Interest: Compound interest is the interest you earn on interest you have already been paid. This may be demonstrated using simple math: if you have $100 and it generates 5% interest every year, you will have $105 at the end of the first year. You'll have $110.25 by the end of the second year, because you earned interest on the $105, and so on and so forth.
Early Withdrawal Penalty: An early withdrawal penalty is a fee banks may charge if you withdraw funds before your 15-month CD matures. Withdrawing your funds before the end of the term may cause you to forfeit a portion of your accrued interest and possibly some of your principal.
Frequently Asked Questions
Is it worth putting my money in a 15-month CD?
Are the interest payments I receive from my 15-month CD taxable?
What is the penalty if I withdraw my money before the end of the 15-month term?
If rates go up during the 15-month term, can I adjust my rate?
Is my 15-month CD protected in case my bank or credit union fails?
When will I be paid the interest my 15-month CD earns?
What happens at the end of the 15-month term?
Additional offers that might be useful
3-Month CDs
When you open a CD account, you agree to deposit your money for a set term, in this case, three months, in exchange for a fixed rate, or APY. The advantage of a 3-month CD is that the money is only tied up for a few months. As of today, the average yield for 3-month CDs is at 3.43% and the best 3-month CD is offering a yield of 5.51%. This rate is multiples higher than the average yield for a conventional savings account, which is currently at !AvgRateSavingsAccount!.
30-Month CDs
A 30-month CD can be advantageous as it forces you to leave your money alone for an extended period of time but at the same time, locks in your rate so you don't have to worry if rates drop during the 30-month term. Currently, the best 30-month CD rate is 4.58%. We've checked banks all across the country to find the best 30-month CDs offered by banks and credit unions for November 2024.
Why we chose it?
What to watch for
6-Year CDs
A 6-year CD is a big commitment because you need to keep your money locked up for the entire 6-year term. On the positive side, you don't have to worry about fluctuations in rates, as you are guaranteed a fixed rate for the duration of the term. On the downside, you are not allowed to access your money unless you are willing to pay what may be a substantial early withdrawal penalty. We've looked at banks all across the country to find the best 6-year CDs offered by banks and credit unions. The best rate currently available for a 6-year CD is 4.35%.
Why we chose it?
What to watch for
Methodology
Our editorial staff continually updates the information contained on our website. Our editorial staff has analyzed virtually all of the banks and credit unions that it follows, and it does weekly rate analysis for more than 250 prominent banks and credit unions. These institutions were chosen because they provide competitive APYs, low fees, and other factors we find important. These banks and credit unions often provide accounts that are available nationally. All of these banks are FDIC-insured, and all of these credit unions are NCUA-insured. Choosing an FDIC-insured bank or an NCUA-backed credit union assures that your money is protected as long as it stays within insurance limits and requirements.