Longer-term certificates of deposit like three-year CDs are a good strategy for savings goals with a defined timeline, such as saving for an upcoming vacation. With competitive APYs still available, now is a good time to lock in rates before they continue to drop due to anticipated interest rate cuts. Some banks offering the best three-year CD rates include BMO Alto, CommunityWide Federal Credit Union, First Internet Bank of Indiana, M.Y. Safra Bank Direct, Bread Savings, and First National Bank of America.
BMO Alto, an online banking arm of BMO, offers competitive CD rates with no minimum deposit requirements and terms ranging from six months to five years. CommunityWide Federal Credit Union has a 4.30% APY with a $1,000 minimum deposit required to open a CD account. First Internet Bank of Indiana offers high-yield CD terms from three months to five years with a competitive rate but has a $1,000 minimum deposit requirement. M.Y. Safra Bank Direct offers a $500 deposit requirement, while Bread Savings and First National Bank of America also offer competitive rates with varying minimum deposit requirements.
A three-year CD allows one to earn a fixed return on savings by locking away money with a bank for three years, providing a higher interest rate compared to shorter-term CDs. However, a drawback is that this ties up money for several years, so it may not be ideal for funds needed in the near future. Online banks generally offer higher interest rates for CDs due to lower overhead costs. Other alternatives to consider include a CD ladder, short-term CDs, specialty CDs, or a high-yield savings account for more flexible savings options.
Opening a 3-year CD involves comparing rates and requirements, providing necessary personal information, and funding the account with a one-time deposit. Options for withdrawing funds early or adjusting rates based on market changes should be considered. It’s essential to compare rates across banks to get the best deal on a three-year CD, as higher rates may be available elsewhere. Overall, the strategic opening of a three-year CD can offer a fixed return on savings over the investment term.
