When looking for a CD, it is critical to analyze all of the criteria, including APY, minimum deposit requirements, and early withdrawal penalties. Although a 30-month CD locks up your money for an extended period of time, it also encourages you not to access your savings, allowing them to grow. It also locks in your rate for 30 months, protecting you in case rates fall if economic conditions change. We've researched banks and credit unions around the country to identify the best CDs with the best high-yield 30-month rates. The highest-yielding 30-month CD is currently yielding 4.58% and the countrywide average is at 2.77%.
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What is a 30-month CD and how does it work?
A 30-month CD is a deposit account with a fixed rate for a 30-month term. When you open a 30-month CD, you are lending your money to a bank or credit union, and they are agreeing to pay you a specific rate for the duration of the term. The nationwide average yield is currently 2.77%, with the best high yield 30-month CD rates at 4.58%.
Once you deposit at least the required minimum opening deposit, your rate is also locked and cannot be raised or lowered until the CD matures, unless your funds are in a Step-Up CD or other variable rate CD. 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. It is important to consider the term length before opening the CD account. At the end of the term, the CD will generally auto-renew for the same 30-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 30-month CD?
The first step in selecting the best high-yield 30-month CD involves making sure that the bank or credit union you select is backed by FDIC or NCUA insurance. Secondly, you want to select the 30-month CD with the highest APY so that your money can grow as much as possible during the length of the term. In the past, the longer the term, the higher the yield, but this is not necessarily the case in today's economic environment. Be sure to check rates across different terms to make sure you have the highest APY based on your desired term. Lastly, and maybe not so important, is the minimum required opening deposit. This may not be so important because, unless you are considering a jumbo CD, the minimum will generally be no more than a few thousand dollars. Lastly, if you feel you may not be able to commit for the full three years, you want to understand exactly how much the early withdrawal penalty might be, as it may be substantial.
Pros and cons of having a 30-month CD
| The APY is generally higher than a shorter term CD. | In case funds need to be withdrawn before the end of the term, the early withdrawal penalty may be substantial. |
| The yield is higher than most conventional savings accounts, money market accounts and checking accounts. | If rates continue to rise, you do not get to adjust your rate higher. |
| Due to the early withdrawal penalty, this long term CD forces you to save your money and allow it time to work and grow. | If inflation is rising at a higher rate than the yield on the 30-month CD, the purchasing power of the money in the CD will decrease until the term is over. |
| Once you open and fund your account, your rate is fixed for duration of the 30-month term. | |
| As long as the bank or credit union is an FDIC or NCUA participating bank, your money is up to the limits outlined by those insurance programs. |
Alternatives to 30-month CDs
If you think you may need your money sooner than the commitment a 3-year requires, it may be beneficial to consider a shorter term CD such as a 2-year, 18-month or shorter 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 a 30-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 30-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 4.66% and higher are now available from online banks. This is the one type of account that offers yields similar or higher than a 30-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 30-month CD.
Important terms to know
Annual Percentage Yield (APY): The total interest you receive on money in a 30-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 30-month CD will earn.
Minimum Opening Deposit: This is the lowest amount of money you must deposit to open your 30-month CD account.
Interest: Interest is the money you earn from depositing your cash with a bank or credit union into your 30-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 30-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 30-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 30-month CD?
Is the interest I receive from my 30-month CD taxable?
What happens at the end of the 30-month term?
When will I be paid the interest my 30-month CD earns?
What is the penalty if I withdraw my money before the end of the 30-month term?
If rates go up during the 30-month term, can I adjust my rate?
Is my 30-month CD protected in case my bank or credit union fails?
Additional offers that might be useful
9-Month CDs
A nine-month CD locks up your money for a somewhat extended term but also offers a higher and more attractive APY, especially when compared to a conventional savings account. The best 9-month CD account currently available is offering a yield of 5.75% with the average rate at 4.01%. We've compiles some of the best 9-Month CDs we've analyzed being offered by banks and credit unions for September 2024:
2-Year CDs
A 2-Year CD locks up your money for a longer period of that can be very beneficial as it forces you to save towards your goals and locks in a rate you can sleep peacefully knowing won't change until the end of the term. There are other CDs with shorter terms that may offer similar yields that may be worth exploring. We've checked banks all across the country to find the best 2-Year CDs offered by banks and credit unions, with a top yield of 5.92% and the average about 3.24%.
1-Month CDs
A one-month CD locks up your money for a very short period of time, which makes them a convenient alternative to traditional savings account and longer term CDs. We did our research and some of the top banks are offering APYs as high as 4.90%. We've compiles some of the best 1-Month CDs offered by banks and credit unions for September 2024.
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.