Here are the top rates for popular savings accounts and certificates of deposit (CDs) as of Sunday, December 17. Raisin, TotalDirectBank, Popular Direct Bank, Valley Direct Bank, and CIBC Bank are offering competitive rates for savings accounts. Raisin is offering a $250 bonus for deposits between $25,000 and $49,999.99, while Popular Direct Bank and Valley Direct Bank are offering a $500 bonus for deposits of $50,000 or more. Sofi is offering a checking and savings account with up to a $250 bonus for qualifying direct deposits and a high APY on savings balances.
High-yield savings accounts are currently offering favorable rates, with online or lower-profile institutions typically providing the highest rates. These banks have lower overhead costs and are willing to pay higher rates to attract new customers. High-yield savings accounts offer the security of a savings account with a high annual percentage yield (APY) and are suitable for shorter-term goals.
High-yield checking accounts also offer competitive rates, although slightly lower than high-yield savings accounts. Checking accounts serve as a hub for everyday spending and typically come with checks and/or debit cards for easy access to funds.
Money market accounts provide a middle ground between checking and savings accounts, offering easy access to funds through checks or a debit card. These accounts usually offer tiered interest rates based on the account balance.
Cash management accounts, offered by online banks, combine features of savings and checking accounts. They typically offer unlimited transfers and come with a debit card for easy access. However, depositing cash may incur a fee.
Certificates of deposit (CDs) offer higher interest rates compared to other accounts. These accounts require a predetermined lock-in period, ranging from three months to five years. Early withdrawal from a CD usually incurs a penalty, unless a no-penalty CD is chosen. The longer the lock-in period, the higher the interest rate.
No-penalty CDs offer rates slightly higher than high-yield savings accounts and provide improved interest rates compared to traditional brick-and-mortar savings accounts.
Different CD terms cater to various investment goals. Six-month CDs are suitable for short-term gains, while one-year CDs are popular among investors building a CD ladder or seeking a cash safety net. Two-year CDs offer a longer lock-in period for a specific rate, while three-year CDs are useful for diversifying investments. Five-year CDs provide long-term high rates.
CDs are generally considered safe investment vehicles, and securing a favorable rate can yield significant earnings in the long term.