Best 5-Year CD Rates January 2025

Following the Federal Reserve's third rate cut, savings rates on both CDs and high-yield savings accounts have dropped. However, rates on some of the best 5-year CD accounts still remain over 4%. So if you're looking to open a CD account, now's the time to do it.

Here's a look at why rates might continue to dwindle in the months ahead and what good CD deals you can still scoop up.

Starting in March 2022, the Federal Reserve raised the federal funds rate 11 times in an attempt to ease inflation. These interest rate hikes caused mortgage rates, credit card APRs and interest rates on other types of loans to increase, putting a strain on borrowers' budgets. But as interest rates rose, so did savings rates. CD rates went up with the Fed hikes.

However, when the Fed ended its rate hiking campaign, the growth of CD and high-yield savings account rates also came to an end. At its latest meeting in December, the Federal Reserve cut rates by 25 basis points, which caused CD rates to take a hit. Savings rates might continue to fall throughout the next year as the Fed considers further rate cuts.

You can use our tool — powered by Bankrate — to compare CD rates below.

Why open a CD?

A CD, or certificate of deposit, is a type of investment account that holds a fixed amount of money for a fixed term. The APY associated with a CD account is usually higher than that of a traditional savings account, so you’ll be able to earn more thanks to compound interest. Our savings calculator can help you determine just how much you’ll earn in interest once your CD term ends.

Unlike savings accounts, though, you won’t be able to access the cash in your CD before the end of the term, or you’ll be met with a fee. Therefore, it’s a good place to put aside cash you don’t intend on using until a future date — maybe you don’t plan on purchasing a new vehicle for another two years and want to accrue as much savings from interest as possible until then.

CDs are also good options for anyone looking for a fixed, predictable and safe return on their savings. This is because most CD accounts are FDIC or NCUA insured, meaning up to $250,000 per account is safe if the bank goes under. The difference depends on whether you open an account with a bank (overseen by the FDIC) or a credit union (regulated by NCUA).

Short-term vs. long-term CDs

It can be easy to choose between a 1-year CD and a 5-year CD if your money is going toward a particular savings goal. For example, you may be getting married in one year, so it would make sense to open a CD with a similar term.

On the other hand, if you’re looking to open a CD with no particular savings goal in mind, you’ll need to consider how long you'll be able to reasonably go without accessing your cash. If you open a 5-year CD and then realize you need to withdraw that cash at the 3-year mark, you'll have to pay a fee, offsetting any interest earned. If you're unsure if you will need access to cash, you can consider a no-penalty CD.

And since rates on CDs are fixed, you can take advantage of high rates for an extended period of time by opening a 5-year CD, which is why we recommend comparing short-term and long-term CDs following the Fed's rate cut.

Top 5-year CD accounts

SchoolsFirst Federal Credit Union

APY: 4.25%

Minimum Balance: $500

Marcus by Goldman Sachs

APY: 3.65%

Minimum Balance: $500

Pima Federal Credit Union

APY: 3.00%

Minimum Balance: $250

The Federal Savings Bank

APY: 3.80%

Minimum Balance: $5,000

First Internet Bank

APY: 3.65%

Minimum Balance: $1,000

Lafayette Federal Credit Union

APY: 3.70%

Minimum Balance: $500

Transportation Federal Credit Union

APY: 4.40%

Minimum Balance: $1,000

EFCU Financial

APY: 3.75%

Minimum Balance: $500

Mountain America Credit Union

APY: 4.25%

Minimum Balance: $500

Securityplus Federal Credit Union

APY: 4.00%

Minimum Balance: $1,000

MYSB Direct

APY: 3.90%

Minimum Balance: $500

BMO Alto

APY: 3.90%

Minimum Balance: $0

Seattle Bank

APY: 3.60%

Minimum Balance: $1,000

CoVantage Credit Union

APY: 3.88%

Minimum Balance: $1,000

Credit Human

APY: 4.11%

Minimum Balance: $500

Pros and cons of CDs

Pros

• CDs offer guaranteed returns on deposits
• Fixed rates on CDs mean that even if rates fall, the APY on your account will remain consistent
• Most CD accounts from banks and credit unions are federally insured for up to $250,000
• Since you can only withdraw funds when your CD account matures, you won't be tempted to spend your money elsewhere

Cons

• If you want to access your money before your term expires, your penalty fee might negate the interest earned.
• You could earn more money with other investment opportunities, depending on market conditions.
• Upon maturity, the purchasing power of the money earned from your CD might be less due to inflation.

Bottom line

Since APYs on CD accounts are still fairly high, now is the best time to lock in rates. More rate cuts might come throughout 2025 and 2026, so saving rates could lower over the coming months. Just be sure you won't need to withdraw any funds from your CD before its maturity date, or you'll offset any interest you may have earned.

Related Content

• The Fed Just Cut Rates. What Should Savers Do About CDs and High-Yield Accounts?
• Savings Calculator: If You Saved $5,000 Five Years Ago, Here's What You'd Have Now
• Best 1-Year CD Accounts