The Best 2-Year CDs Today Are Rewarding, but You Could Miss Out On Better Rates to Come

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A CD with a two-year term can be a good option for medium-term goals, such as a down payment on a home or a new car you plan to buy in a couple years. In a CD, that money can stay safe and still earn a small amount of interest.

These CDs even work as a happy medium between shorter- and longer-term options.

“Two-year CDs can be a solid option if you don’t want to lock your money away for three years, but if you want a higher yield than a one-year CD,” says Jeb Jarrell, certified financial planner and principal of Plentiful Wealth, LLC a financial planning firm in Kentucky. 

Today, some banks are offering APYs close to 3% for two-year CDs. And as the Federal Reserve continues raising interest rates to combat runaway inflation this year, experts predict rates for varying CD terms will increase, too.

Here are the best 2-year CD rates available right now, and what experts want you to consider before choosing this CD term in today’s environment. 

Best CD Rates for September 2022

Bank2 year apyMinium Deposit
Bread Savings (formerly Comenity Direct)3.50%$1,500
Live Oak Bank3.25%$2500
Sallie Mae3.20%$2500
Marcus by Goldman Sachs3.10%$500
TIAA Bank3.05%$1000
Capital One3.00%$0
Discover Bank3.00%$2500
Synchrony Bank3.00%$0
Barclays Bank3.00%$0
American Express National Bank2.75%$0

Note: The APYs (Annual Percentage Yield) shown are as of September 23, 2022. The APYs for some products may vary by region.

What is the Average 2-Year CD Rate Right Now?

The average rate for two-year terms is 0.51% according to the Federal Deposit Insurance Corporation (FDIC). The national deposit index conducted by Bankrate is higher, at 0.68% average for 2-year CDs. Like NextAdvisor, Bankrate is owned by Red Ventures. 

However, many online banks offer rates higher than these national averages, including those on our list of best 2-year CDs. Among the two-year CD rates on our list, the average is a much higher 2.55% APY. 

Should I Choose a 2-Year CD?

A two-year CD may be a good option if you don’t plan to touch the money for at least two years — and you already have emergency money elsewhere. 

Consider how much liquidity you’ll need first, Jarrell says. If you think you may need that money within two years, are you going to make enough in interest to make the CD worth it compared to an account that’s more accessible, like a high-yield savings account

If you’re saving up for a new car or planning to make home renovations, the return on your investment could make the CD worthwhile. For instance, say you put $500 in a 2-year CD with a 2.50% APY. When the CD matures in two years, you’ll have $25.63 in interest and can withdraw your money without penalty.

For specific goals like this, an illiquid CD can even be useful, so you’re not tempted to withdraw the money for something else.

Many experts we’ve spoken to don’t recommend CDs longer than two-years, so it may be a safe bet compared to longer-term CDs that offer higher rates right now. Still, there are some drawbacks to opening any CD right now. That’s because CD rates are fixed. A 2.5% APY may be higher than other, more liquid options today. 

However, you may miss out on a bigger return if you lock in a two-year CD now as rates continue to rise. If you’re considering opening a two-year CD, be sure to weigh other savings options, especially those with variable rates that will rise alongside federal rate changes. 

“Two months from now, when rates are higher, you might be leaving money on the table,” says Jarrell. 

One final reason you may consider a two-year CD today is because it may work well within a CD ladder when rates continue to rise. You can spread out your money across CDs with varying terms, for example a one-, two-, and three-year CD, to take advantage of higher rates and still have liquidity each year to roll the money into a new CD. Then, if rates drop, you’ll have a locked-in rate for a guaranteed return. 

Tricia Kollath, a certified financial planner for Inspired Financial Planners, LLC in Ocean Springs, Mississippi uses two-year CDs as a maximum term when creating a CD ladder. “I don’t buy all of the same maturity, and I really put some thought into the [CD] ladder.” 

2-Year CDs Compared to 1-Year and 3-Year CD Rates

Two-year CD rates sit between one- and three-year CDs when it comes to rates, fees, and returns. Since long-term CDs could hinder you from taking advantage of rising rates, they can be a good option if you want a better rate than a 1-year term, but don’t want to commit to a three-year term. 

Aside from the maturity timeframe, there are the big differences experts recommend comparing:

1-Year CDs

Banks listed among our best CD rates offer 1-year CDs range between 2.00% and 2.50% right now. Recently, this is the CD type we’ve seen increase rates most quickly on average. You may choose a one-year term to lock in a solid APY without the time commitment of longer terms. But since one-year CDs have a slightly lower APY, you’ll still get a smaller return today compared to two-year CDs. 

A one-year CD can be a safe bet if you only want to commit to a CD for a short time given today’s rising rates, and want to earn a guaranteed return. Most one-year CDs offer a better rate than high-yield savings accounts right now, so you can lock in a potentially higher return if you’re willing to not touch your funds for a year. 

3-Year CDs

Three-year CDs offer between about 2.90% and 3.35%, and you must wait three years before withdrawing to avoid paying a penalty. 

But many experts don’t recommend a CD with this term length or longer while rates are still rising. Locking your money into a rate today long-term could keep you from likely much higher returns before the CD reaches maturity.

It’s best to consider other savings options that offer liquidity and variable interest rates, such as a high-yield savings account or money market account, or even a shorter-term CD.

How to Open a 2-Year CD

If you’re considering a two-year CD — or any new certificate of deposit —  always compare rates, fees, and other account details before opening. Online banks often offer the most competitive rates. Be sure to look for minimum deposit requirements, early withdrawal penalties, and other account perks that could be worthwhile for your financial goals, such as tracking your interest, online banking, and rate guarantees within a certain timeframe. 

When you’ve narrowed down your choice, you’ll need to provide your Social Security number or tax identification number to open your account, as well as other personal information. You also may need other bank account information to make an online deposit to open your CD via electronic transfer, instead of cash or a check. 

2-Year CD FAQs

Will 2-year CD rates go up?

Yes, as the Federal Reserve continues rate hikes, experts predict that CD rates will increase across most terms.

What if rates go up while I have money deposited?

If your bank raises interest rates after you open a CD account, you’ll still have the APY you agreed to when opening your account. Different types of CDs — such as a no-penalty or bump-up CD — can help you avoid penalties and take advantage of higher rates even after account opening.

What if I want to withdraw my money before 24 months?

If you want to withdraw money before your CD matures, you’ll pay a penalty on your principal balance. Typically, this penalty is equal to a few months’ interest, but check with your individual bank before opening.