Certificates of deposit are appealing for people looking for a low-risk way to invest and save money. They're similar to savings accounts that earn interest, except that the money you put in a CD account has to stay in the account until the CD's term is up, which could range from a few months to a few years. And although you won’t earn a particularly high rate of return with a CD, CD account rates are usually higher than savings account rates. Plus, you won’t lose any of the principal you invest.
Many banks offer CD accounts with different terms and requirements, so it can be hard to choose one. Still, it's important that you shop around for the best CDs — and the best CD rates. Fortunately, GOBankingRates has done the research for you in its annual Best Banks study.
GOBankingRates ranked the 10 best CD accounts of 2016 based on three criteria: minimum deposit to open, 12-month CD annual percentage yield (APY) and 60-month CD APY. If a 12-month or 60-month CD was not offered, the next closest time frame was considered.
If you're thinking about putting your money in a CD, check out the offerings from these 10 banks. All of these banks offer accounts with CD interest rates that are higher than the national average. For reference, the national average CD account rate on 12-month CDs is just 0.21% APY; on 60-month CDs, the average is 0.79% APY.
Best: CIT Bank
Why: CIT Bank earned the top spot because it has some of the best CD rates on 12-month and 60-month CDs.
Review: When GOBankingRates compiled data for this study, CIT Bank boasted an APY of 1.25% on its one-year Term CD. As of Jan. 8, 2016, the APY is a slightly lower 1.22%. Still, it's one of the highest APYs in the GOBankingRates ranking, and the minimum opening deposit is just $1,000. The five-year CD APY of 2.20% is also one of the highest CD rates in the top 10. And, CIT Bank offers RampUp CDs, which let you boost your rate once during the term of the CD if the bank's rates go up.
How to open: You must be a U.S. citizen and 18 years old to open an account. You can apply online providing your address, Social Security number and driver’s license or state-issued ID. You’ll also need your bank account number to transfer funds electronically to a CD account.
Banks That Rounded Out the Top 10
Barclays Bank Delaware
Why: No minimum deposit requirement and competitive rates put the CD products from Barclays Bank Delaware in the top 10.
Review: Barclays Bank Delaware is one of three banks on this list that don't require a minimum deposit to open a high-interest CD account. And, there are no monthly fees. Plus, its 60-month CD has the highest APY in this top 10 — 2.25%. However, the 0.80% APY on the 12-month CD is slightly lower in comparison to other 12-month CDs on this list.
How to open: You can open an account on the Barclays site by providing personal information, including your Social Security number, and transferring funds electronically from another account.
Related: 10 Best Savings Accounts of 2016
Synchrony Bank
Why: Synchrony Bank offers appealing CD rates, but its minimum deposit requirement of $2,000 is high compared with other banks' requirements.
Review: Synchrony Bank has a high minimum deposit requirement, but a 1.25% APY on its 12-month CD and 2.20% APY on its 60-month CD mean your money can grow more. Plus, rates increase as your deposit increases. For example, the APY on the 60-month CD climbs to 2.25% on deposits of $25,000 or more.
How to open: You can open an account online. You’ll need to provide your date of birth, Social Security number, driver’s license or state ID card number, and bank account and routing numbers to transfer funds electronically to Synchrony.
Ally Bank
Why: Ally Bank offers appealing CD rates and has no minimum deposit requirement.
Review: The winner of Best Online Bank of 2016 also offers some of the best CD rates — 1.05% APY for its 12-month CD and 2.00% APY for its 60-month CD. For its other CDs, the rates rise as your deposit rises.
Ally Bank also has an 11-month No Penalty CD that doesn’t charge a fee for early withdrawal. And its Raise Your Rate two-year and four-year CDs start with a 1.30% APY and allow you to increase your rate at least once during the terms.
How to open: You can open an account online. You’ll need to provide personal information, including your date of birth and Social Security number.
Nationwide Bank
Why: Nationwide Bank requires a low minimum deposit of $500, but the 1.95% APY on its 60-month CD is lower than most in the rankings.
Review: Nationwide Bank offers a competitive 1.05% APY on its 12-month CD for balances less $99,999.99 and under. For balances $100,000 and up, the APY is 1.10%. However, it’s one of only two banks in this top 10 group that offers less than 2.00% APY on its 60-month CD. But, account holders with at least $100,000 in their 60-month CD can earn 2.00% APY.
How to open: You can open an account online on the Nationwide site by providing personal information, including your date of birth, Social Security number and contact information.
Read: How CD Laddering Works
First Internet Bank
Why: At 2.22% APY, First Internet Bank offers one of the highest 60-month CD APYs on this list. However, the 12-month CD APY is a little less competitive.
Review: If you’re willing to keep your money tied up for a while to earn a higher yield, First Internet Bank offers an attractive 2.22% APY on its 60-month CD. You’ll also need to make a minimum deposit of $1,000. The 1.11% APY on the 12-month CD is respectable but not the highest available.
How to open: You can open an account online. You’ll need to provide your personal information such as your address and date of birth. The bank might even ask for your driver's license.
Sallie Mae Bank
Why: Sallie Mae Bank offers competitive CD yields but also has a high minimum deposit of $2,500.
Review: Sallie Mae Bank offers a 1.25% APY on its 12-month CD and a 2.10% APY on its 60-month CD. And neither account charges monthly fees. However, the minimum deposit requirement is one of the highest offered by banks on this list. Plus, Sallie Mae has a limited CD offering with only 12-, 36- and 60-month terms.
How to open: You can open an account online by providing personal information, including your Social Security number and your bank information to transfer funds electronically to your new account.
AloStar Bank of Commerce
Why: AloStar Bank of Commerce offers one of the highest 12-month CD APYs in the top 10. But its 60-month CD APY is the lowest.
Review: AloStar Bank of Commerce requires a minimum deposit of $1,000, but it offers a broad range of CD terms from 90 days to 60 months. Since GOBankingRates aggregated the data in November 2015, the APY for 12-month CDs climbed from 1.21% to 1.26%. However, the 1.75% APY on its 60-month CD is the lowest in this group and hasn't changed — yet.
How to open: You can open an account online. You’ll need your Social Security number, government-issued ID and bank account information to fund your new account.
Capital One
Why: The no minimum deposit requirement makes Capital One's CD products appealing to those without a lot of money to invest. Although the APY on its 60-month CD is competitive, the APY on its 12-month CD is the lowest in this top 10 group.
Review: You’ll earn more on short-term CDs at other banks, considering that the Capital One 12-month CD has an APY of just 0.40%. However, its 60-month CD currently offers an appealing 2.20% APY. When the study was conducted, Capital One's 60-month CD's APY was only 2.10%.
How to open: You must be 18 and a U.S. citizen to open an account. And opening deposits must come from a checking account.
Discover Bank
Why: Discover Bank offers competitive CD yields but also has a higher minimum deposit requirement of $2,500.
Review: The Discover Bank 12-month CD has an appealing 1.15% APY, and its five-year CD currently offers a respectable 2.20% APY. When GOBankingRates was conducting the research, the five-year CD had an APY of only 2.00%.
The bank also offers a large range of CD terms from three months to 10 years. However, Discover Bank has one of the highest minimum opening deposit requirements in this list, requiring an initial deposit of $2,500.
How to open: You can open an account online by providing contact information and your Social Security number. You can fund your account by mailing a check or transferring funds electronically.
Keep Reading: What Should I Do With $50,000 Coming Out of a CD Account?
Bank
Account
Minimum Deposit to Open
12-month APY
60-month APY
CIT Bank Term CDs
$1,000
1.22%
2.20%
Barclays Online CDs
$0.00
0.80%
2.25%
Synchrony Bank CDs
$2,000
1.25%
2.20%
Ally Bank High Yield CD
$0.00
1.05%
2.00%
Nationwide Bank CDs
$500
1.05%
1.95%
First Internet Bank CDs
$1,000
1.11%
2.22%
Sallie Mae CDs
$2,500
1.25%
2.10%
AloStar Bank of Commerce Personal CDs
$1,000
1.26%
1.75%
Capital One CDs
$0.00
0.40%
2.20%
Discover Bank CDs
$2,500
1.15%
2.20%
*Rates are current as of Jan. 8, 2016.
Methodology: To compile its list of the top 120 banks, GOBankingRates surveyed the FDIC’s list of banks sorted by asset size, excluding non-active institutions, those with less than $1 billion in assets, investment banks and any institutions that require customers to use investment services to access commercial bank accounts. This list of 120 banks includes 90 brick-and-mortar banks and 30 online-only banks according to the GOBankingRates database. No asset threshold was consulted for online-only banks.
Criteria for ranking: To determine its Best CD Account category ranking, GOBankingRates evaluated each institution’s 12-month certificate of deposit product and five-year CD product. If the bank did not offer a 12-month or five-year CD, then the next-closest CD term length was selected for evaluation. GOBankingRates scored the CD accounts from most to least favorable for the following factors: (1) minimum deposit to open a 12-month CD, (2) annual percentage yield for a 12-month CD, (3) minimum deposit to open a five-year CD and (4) APY for a five-year CD. APY for a 12-month CD and APY for a five-year CD were weighted more heavily than other ranking factors, and accounts were then ranked by overall score.
Data was compiled via the GOBankingRates interest rate database and verified against the individual institutions’ websites between Oct. 29 and Nov. 23, 2015. Rates, terms and conditions are subject to change at the discretion of the individual financial institutions. APY was based on the minimum deposit required to open the account. Some interest rates might be short-term or promotional offers only, and it is possible additional terms and conditions must be met in order to obtain the interest rates listed. Rates and availability might vary by region. Please verify terms and conditions before opening an account.
GOBankingRates is a personal finance and consumer interest rate website owned by ConsumerTrack, Inc., an online marketing company serving top-tier banks, credit unions, and other financial services organizations. Some banks mentioned in the Best Banks of 2016 survey are clients of ConsumerTrack, Inc., which serves more than 100 national, local and online financial institutions. Rankings are completely objective, and no institution, client or otherwise, paid for inclusion or specific placement.
This article originally appeared on GOBankingRates.com: 10 Best CD Accounts of 2016