Generally, CDs with longer terms carry more severe withdrawal penalties than short-term CDs. But again, long-term CDs are only an option if you’re willing to stash away some cash you won’t be able to touch for years. If you’re interested in accruing the maximum amount of interest possible, consider long-term CDs, which historically have the highest APYs. For instance, you may forfeit six months’ worth of interest if you withdraw money from a one-year CD before 12 months are up. If you withdraw money from your CD before it “matures” (reaches the end of its term), you’ll likely get hit with steep penalties in the form of reduced interest.
That term could range from a few weeks to several years, depending on the CD you choose. The other major difference is that you’ll typically only earn interest on a CD account if you refrain from withdrawing funds during the term. Data accurate as of December 4, 2023.Ī CD is similar to a savings account, but the interest rate is fixed-not variable. Rates are based on a $25,000 minimum deposit.
