A 2-year certificate of deposit (CD) is a solid choice for investors who want better returns than a regular savings account but still want the same level of safety with Federal Deposit Insurance Corp. (FDIC) or National Credit Union Administration (NCUA) insurance up to $250,000.
The fixed interest rate and relatively short duration of this option make it an attractive alternative for those who wish to steer clear of stock market volatility and have a low tolerance for risk. We did the research and found the best rates for a 2-year CD. All rates are current as of April 23, 2024.
Summary
The best 2-year CD rates: Our 10 top picks*
The 10 best 2-year CDs of April 2024
First Internet Bank
| 2-year APY | 4.82% |
| Minimum Deposit | $1,000 |
| Early withdrawal penalty | 360 days’ interest |
Why we picked it
First Internet Bank was the first online bank, which is why you can find such great rates with them—there’s no overhead in managing multiple branches. Your 2-year CD has a $1,000 minimum deposit, and you’ll earn a competitive 4.82% APY. Best of all, setting up an account takes just a few minutes.
Quontic Bank
| 2-year APY | 4.50% |
| Minimum Deposit | $500 |
| Early withdrawal penalty | 2 years’ interest |
Why we picked it
With a 2-year CD from Quontic Bank, you’ll earn interest from the moment you make your initial deposit. From there, interest pays out during each monthly statement period. However, keep in mind that APY is calculated using compound interest, which you’ll fully realize by keeping the interest in the CD.
NBKC Bank
| 2-year APY | 4.25% |
| Minimum Deposit | $250 |
| Early withdrawal penalty | 1 year of interest |
Why we picked it
nbkc bank’s 2-year CD has one of the lowest minimum opening deposits we’ve seen. With just $$250 invested, you can earn 4.25% APY. Because any term of two years or more has this minimum opening deposit, it makes a great option for building a CD ladder—where you spread the money you have to invest across several CDs at a time to take advantage of different maturity dates for regular interest income and access to funds.
First National Bank of America
| 2-year APY | 4.80% |
| Minimum Deposit | $1,000 |
| Early withdrawal penalty | 360 days of interest |
Why we picked it
When your First National Bank of America 2-year CD matures, you have four options. You can do nothing, and your CD will roll over at the same term automatically at whatever the rate is currently. Your second option is to elect to roll your funds actively into a new CD. Alternatively, you can withdraw all or part of your CD. If you choose to keep some money in the CD, it will roll into a new CD.
TAB Bank
| 2-year APY | 4.80% |
| Minimum Deposit | $1,000 |
| Early withdrawal penalty | 360 days of interest |
Why we picked it
A TAB Bank 2-year CD requires a minimum deposit of $$1,000, and the interest you earn compounds daily to give you a 4.80% APY. At maturity, you have a 10-day grace period where you can withdraw your funds penalty-free before your CD renews automatically at the new rate available at that time.
Newtek Bank
| 2-year APY | 4.75% |
| Minimum Deposit | $2,500 |
| Early withdrawal penalty | 180 days of interest |
Why we picked it
While Newtek Bank has one of the highest minimum deposits on this list at $2,500, it offers a competitive 4.75% APY on its 2-year CDs. You’ll receive up to $250,000 in FDIC insurance. Setting up an account is easy too. It takes five minutes to go through the application and funding process.
MYSB Direct
| 2-year APY | 4.90% |
| Minimum Deposit | $500 |
| Early withdrawal penalty | All interest earned |
Why we picked it
MYSB Direct offers another low opening deposit with $$500 for your 2-year CD. You’ll earn a 4.90% APY and receive FDIC insurance up to $250,000. From application to account funding via manual transfer or Plaid, getting your CD takes a few minutes. You can even have joint ownership of the account.
Alliant Credit Union
| 2-year APY | 4.30% |
| Minimum Deposit | $1,000 |
| Early withdrawal penalty | Up to 180 days |
Why we picked it
If you have more than $75,000 to invest in a 2-year CD, Alliant Credit Union offers a jumbo CD with a better rate than its standard CD. Customers can earn over 5% APY with its jumbo CD, and 4.30% APY on its standard 2-year CD, which is still a competitive rate.
Prime Alliance Bank
| 2-year APY | 4.50% |
| Minimum Deposit | $500 |
| Early withdrawal penalty | 90 days’ interest on the amount withdrawn |
Why we picked it
Prime Alliance Bank is one of the few options on this list that offers IRA CDs. These are CDs with the same terms you’d find in a standard CD, except that it’s inside a retirement account. This matters because you can get tax-deferred growth on your money, provided you qualify for an IRA, and could potentially deduct the IRA contribution on your taxes.
Bread Savings
Bread Savings
| 2-year APY | 4.65% |
| Minimum Deposit | $1,500 |
| Early withdrawal penalty | 180 days’ simple interest |
Why we picked it
Bread Savings is one of the few financial institutions that reward you for your loyalty. Customers can enjoy a higher renewal rate of up to 4.59% APY on a 2-year CD, and up to 5.16% on a 1-year CD. The minimum opening deposit is a little higher than most institutions at $1,500.
Pros & cons of a 2-year CD
A 2-year CD allows you to earn money on a fixed-income investment, although it isn’t for everyone. Here’s what you need to know.
Pros
- Fixed income: You’re earning a fixed interest rate over the life of the term.
- Short-term financial planning: This is ideal for someone who doesn’t need their money for a couple of years, such as if you’re saving for a down payment on a house or car.
- Low risk: Your CD is FDIC or NCUA-insured, depending on if you get it through a bank or credit union, up to $250,000.
Cons
- Early withdrawal penalties: If you end up needing your money during the 2-year CD term, you’re going to pay a penalty for withdrawing the funds before maturity.
- Opportunity cost: If interest rates increase significantly during the two-year term, you’re missing out on the higher rates you could’ve earned by investing in other vehicles or potentially in a CD with a shorter maturity period that allows for reinvestment at these higher rates.
- Minimum deposit requirements: Most 2-year CDs have a minimum deposit requirement of $1,000. However, some are as high as $25,000 or more.
How to choose the best 2-year CD
Before locking your money into a 2-year CD, consider the following:
- Interest rate: What is the APY percentage offered on the CD? How is interest paid? Is there a grace period where you’ll earn the higher rate if rates rise shortly after you apply for the CD?
- Minimum deposit requirement: How much must you deposit into your CD? Is there a grace period to add more funds to your CD?
- Maturity: What are your options at maturity? Are you notified beforehand? Can you roll your money into a new CD?
- Penalties: How much of a penalty will you pay if you need access to your funds before maturity? Are there no-penalty CD options?
Alternatives to 2-year CDs
A 2-year CD is popular because it offers a fixed interest rate and is safe. However, it’s not your only option. Here are some alternatives to consider:
- Savings account: A savings account offers a variable interest rate with the same safety but better liquidity than a CD. However, you’ll have a lower interest rate than a CD.
- High-yield savings account: With a high-yield savings account, you have the same safety as a CD, better liquidity, and often, even better rates. However, your rate is variable, unlike a fixed 2-year CD rate.
- MMAs: An MMA offers the best of both worlds: check writing privileges inside a savings account. There are usually limits to how often you can make transactions in the account, but your rates are usually higher than a standard savings account, and you have better liquidity than a CD.
Best CD rates for more terms
Keep in mind that not all banks with better interest rates are accessible across the country. Our top priority is selecting easily accessible options. Local or regional banks could have better rates, but they might not be open to everyone.
More CDs to consider:
Frequently asked questions
Should I buy a CD now or wait?
In a rising interest rate environment, acting now may be a good idea. However, this entirely depends on your personal financial situation. If you anticipate you might need your money before the CD matures, you’re going to pay a penalty for taking your money out early.
How do I avoid tax on CD interest?
You may be able to defer the tax you pay on a CD if it’s in a qualified account, such as an IRA or 529 plan. Consult with a tax advisor for your personal situation.
Do you pay taxes on a CD when it matures?
Yes, you pay taxes on any interest earned on your CD, even if you don’t withdraw that money. You’ll receive a 1099-INT from your financial institution if you’ve earned enough interest to qualify for one.
