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If you're looking for a way to maximize your savings deposits, certificates of deposits (CDs) could be a good option. Online banks and credit unions often offer better returns on CDs than other savings products.
Two-year CDs are considered long-term CDs. And while they require you to lock up your money for a couple of years, you can earn more interest than you would in a savings account. Here's a look at the best two-year CDs currently on the market.
Best 2-year CDs today compared
| Institution | APY | Minimum Deposit | Early withdrawal penalty |
|---|---|---|---|
First Internet Bank | 4.85% | $1,000 | 360 days interest |
Popular Direct | 4.80% | $10,000 | Up to 730 days interest |
4.65% | $1,500 | 180 days interest | |
4.50% | $500 | Two years interest | |
Alliant Credit Union | 4.40% | $1,000 | Up to 180 days interest |
4.40% | $0 | 90 days interest | |
Marcus | 4.40% | $500 | 180 days interest |
PenFed Credit Union | 4.30% | $1,000 | 365 days interest or 30% of the gross interest amount at maturity |
4.25% | $1,000 | 180 days interest early withdrawal fees | |
4.20% | $2,500 | 6 months interest | |
American Express | 4.00% | $0 | 270 days interest |
Our recommendations
First Internet Bank
First Internet Bank 2 Year CD
First Internet Bank 2 Year CD
First Internet Bank’s two-year CD is among the best you'll find. It pays an APY* of 4.85% and only requires a minimum deposit of $1,000. The online bank is a pioneer in the industry. Along with its CDs, First Internet Bank offers savings, money market and checking accounts, and other services.
Popular Direct
Popular Direct 2 Year CD
Popular Direct 2 Year CD
Popular Direct is a division of Popular Bank. The online bank offers some of the best CD rates on the market, including on its two-year CD. You'll need to deposit $10,000 to open a CD through Popular Direct, but you'll earn higher guaranteed returns than with other institutions.
Bread Savings
Bread Savings 2 Year CD
Bread Savings 2 Year CD
Bread Savings is home to a high-yield savings account (HYSA) and CDs. The online bank's CDs last anywhere from one to five years, with annual percentage yields (APYs) ranging from 5.35% to 4.15%. Bread Savings CDs require a $1,500 minimum deposit to open, and interest compounds daily and is credited monthly.
Quontic Bank
Quontic 2 Year CD
Quontic 2 Year CD
Quontic Bank offers CDs lasting from six months to five years. The online bank’s CD rates are very competitive, and you need just a $500 minimum deposit to open an account. Quontic also offers high-yield savings and money market accounts, high-yield checking and rewards checking accounts, and mortgage loans.
Alliant Credit Union
Alliant Credit Union 2 Year CD
Alliant Credit Union 2 Year CD
Alliant Credit Union offers a great rate on its two-year CD and other CD terms. However, you must be a member, which requires either working for an eligible employer, living in certain parts of Illinois, joining Foster Care to Success, or being closely related to a current member. Alliant offers standard and Jumbo CDs for varying banking needs. A $1,000 minimum deposit is required to open a CD through Alliant.
Barclays
Barclays 2 Year CD
Barclays 2 Year CD
Barclays offers six CD terms, all of them earning attractive rates, even for an online bank. Unlike other banks on our list, there's no minimum deposit required to open a CD through Barclays. For a slightly lower return, Barclays also has a regular savings account.
Marcus
Marcus 2 Year CD
Marcus 2 Year CD
Marcus by Goldman Sachs offers a range of high-yield CDs, including its two-year CD, which has one of the highest APYs on the market and only requires a $500 minimum deposit to open. The online bank is also known for its 10-day CD rate guarantee, which allows you to take advantage of any rate increases that occur during the first 10 days from account opening.
PenFed Credit Union
PenFed 2 Year CD
PenFed 2 Year CD
PenFed Credit Union offers CDs in nine different terms, ranging from six months to seven years. Its two-year CD pays an APY of 4.30% and, like all PenFed CDs, requires a $1,000 minimum deposit. You must be a member to open one of the credit union’s CDs. Fortunately, there aren’t many obstacles: PenFed membership is available to all citizens or permanent residents of the U.S.
Rising Bank
Rising Bank 2-Year CD
Rising Bank 2-Year CD
Rising Bank is a great option for savers because of its range of interest-bearing accounts. Along with a competitive high-yield savings account, the online bank offers three types of CDs—standard CDs, jumbo CDs, and Rising CDs, which are bump-up CDs with the option to bump your rate and add funds during your CD term. Rising Bank's two-year CD currently earns 4.25% APY. The rate is lower than some of the bank's other CD terms, but it's still impressive enough to make our list. The bank follows a somewhat uncommon compounding schedule, with Interest compounded and credited to CD accounts every three months.
Discover
Discover 2 Year CD
Discover 2 Year CD
Discover offers 12 different CD terms ranging from three months to 10 years. The company, best known for its credit cards, currently pays an APY of 4.20% on its two-year CD and has a $2,500 minimum deposit requirement. Interest compounds daily on Discover CDs and is credited monthly.
American Express
American Express 2 Year CD
American Express 2 Year CD
American Express offers more than just credit cards. It also has a selection of online CDs, with terms ranging from 11 months to five years. American Express’s CD APYs vary from 4.50% to 1%. With an APY of 4.00%, its two-year CD is one of its better offerings. There's $0 minimum balance required to open a CD through American Express and interest compounds daily and is credited monthly.
Methodology
To determine the best two-year CDs, we employed a comprehensive approach. First, we compared interest rates across various banks and credit unions, prioritizing those offering the highest APYs for our chosen term.
We also considered other factors, including:
- Deposit requirements.
- Early withdrawal penalties.
- Account features.
- Insurance coverage.
- Renewal options.
- Grace periods.
- Compounding schedules.
- Customer service.
- Reputation of the financial institution.
Ease of use and processes for opening an account were also considered, giving preference to CD accounts that could be opened online.
Pros and cons of a two-year CD
Pros
- A guaranteed rate of return.
- Access funds earlier than longer-term CDs (4 or 5 years).
- FDIC or NCUA insured up to legal limits.
- The fixed interest rate protects against rate drops over time.
Cons
- Interest rates may increase over the two-year term.
- Higher early withdrawal penalty fees than on short-term CD accounts.
- There's no guarantee of earning higher rates than shorter CD terms.
What happens if you take your money out early?
With CDs, you don't need to worry about monthly fees. But, if you withdraw your money before your CD term ends, your bank usually charges an early withdrawal penalty. Banks use CD deposits for lending and generally offer higher rates on CDs than other deposit accounts in exchange for leaving those balances untouched.
The early withdrawal penalty is usually calculated based on the length of your CD term. Generally, the longer the term, the bigger the penalty for withdrawing funds early.
Alternatives to two-year CDs
There are other options if you want to earn interest but don't want to tie up funds for two years.
High-yield savings accounts
High-yield savings accounts (HYSAs) offer more accessibility to your funds; sometimes, their interest rates are as high as CDs. Online banks are a great place to look for the best HYSAs, which often carry low or no monthly service fees.
Money market accounts
Money market accounts are known for their above-average yields, larger deposit requirements, and checking account features. Many MMAs come with debit cards or check-writing privileges. However, not all of them do, so check before you open an account.
Short-term CDs
If the thought of tying up funds for two years without access is hard to swallow, consider opening a CD with a shorter term. Some banks offer highly competitive rates on CDs with terms of 12 months or less.
Dividend stocks
If you're willing to take some risk, dividend stocks offer the potential for higher returns. Instead of interest, you'll earn dividends paid out to shareholders by the company from its profits. Remember that stocks are market investments and are not guaranteed, so you could lose some or all of your money. For the vast majority of investors, stocks should be considered a long-term holding.
TIME Stamp: 2-Year CDs are best for long-term savings plans
Two-year CDs can help you reach your long-term financial goals. By choosing the highest CD rate, you ensure the best return on your investment for a specified period. Compare online banks, credit unions, and other financial institutions to find the right CD for your needs.
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