Understanding and finding the best CD rates


Once you’ve decided to invest in a certificate of deposit (CD), it is in your best interest to find the best rates. When you open a CD, you agree to make an initial deposit and the bank guarantees a specified interest rate for the term you choose.

CD rates are determined by three factors:

  • The term length, which is the amount of time until your CD matures and when you are eligible to withdraw your money
  • Current interest rates, which impact how much the bank pays on deposits, and
  • The rate of return, which is how much your bank expects to earn from the money deposited into the CD.

CD returns are based on the annual percentage yield or APY rates. APYs consider the compounding period—that is the frequency with which interest is paid on the account. Banks may compound rates on a yearly, quarterly, monthly or daily basis. [Crestmark CDs provide simple interest, not compounded interest and are based on the annual percentage rate, or APR.]

Rates and the Federal Reserve Bank

The Federal Reserve Bank determines interest rates, which impact CD rates. When the economy is thriving, the Fed raises short-term rates to prevent inflation. If the economy grows too fast and drives up prices, inflation makes it harder for people to borrow money and to pay for goods and services. When the economy is not doing well, the Fed lowers rates, encouraging people to continue borrowing and buying goods, in order to prevent a recession, when a majority of people may hold tightly to their money and stop spending.

Now’s the time to invest in CDs

CD rates have been rising since the 2008 recession and the economy continues to improve. That makes now the perfect time to invest your money in a low-risk, solid-return, guaranteed-to-grow CD.

Term requirements

The term of a CD refers to the length of time you agree to leave your money in the bank. Terms, like rates, vary among banks. Terms can range from 30 days to 10 years, but most CDs are generally invested for three months to five years.

Penalty rates

When you invest your money in a CD, you commit to keeping it there for a specified period of time. If you choose to withdraw your money early, you may face penalty fees, which vary according to your bank’s restrictions. It is important to weigh the benefits of early withdrawal against the amount of interest you may lose.

CD investment amounts

The amount you can invest in a CD varies among banks, the same way terms and lengths do. Banks may allow small minimum investments or require much larger amounts. Crestmark allows deposits of $25,000 to $250,000.

Finding the best rates

When determining the best current rates on CDs, be sure to consider the details including minimum and maximum investment requirements, term lengths and penalty rates—and what is right for your business.

We invite you to invest with Crestmark or to learn more about other financial and lending options, please contact us.