Best 3-month CD rates for May 2024: Earn up to 5.42%

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If you have extra cash you're unsure what to do with, a certificate of deposit can be a good option. These accounts offer higher interest rates compared to traditional savings accounts. But you'll need to lock up your money for the entire term or pay an early withdrawal penalty.

Want to open a CD without a big commitment? Consider a 3-month CD, which offers liquidity while helping your money earn a higher rate.

We compared the banks offering the best 3-month CD rates, helping you maximize your short-term savings.

Top 3-month CD rates

TotalDirect Bank: 5.42% APY

• 3-month APY: 5.42%
• Minimum initial deposit: $25,000
• Early withdrawal penalty: One month's interest 

TotalDirectBank offers a highly competitive rate at 5.42% APY. But there’s a catch — this account requires a hefty minimum deposit of $25,000. The high minimum may be a dealbreaker for customers who don’t have such a large sum to invest.

TotalDirectBank also offers a variety of other CD terms, ranging from six months to five years. This allows you to ladder your investments and take advantage of higher rates for longer commitments.

America First Credit Union: 5.25% APY

• 3-month APY: 5.25%
• Minimum initial deposit: $500
• Early withdrawal penalty: 60 days' interest 

This credit union offers a competitive 5.25% APY on its 3-month CD without a high minimum initial deposit — making this account more accessible for savers. CDs automatically renew at the end of the term. 

America First Credit Union, based in Utah, was founded in 1939 and has grown to become one of the largest credit unions in the country. You can find a few varieties of CDs, including bump CDs (which start at a lower APY but allow you to bump the rate up during the term if rates go up). 

Membership is available to those who live, work, worship, or attend school in certain counties in Utah, Nevada, Idaho, and Arizona and employees of select employers.

Popular Direct: 5.25% APY

• 3-month APY: 5.25%
• Minimum initial deposit: $10,000
• Early withdrawal penalty: 89 days' interest 

Popular Direct, an online division of Popular Bank, offers a 3-month CD with 5.25% APY and a minimum deposit requirement of $10,000. This CD also comes with a fairly hefty early withdrawal penalty. 

PopularDirect could be a good option if you’re looking for an online bank with the backing of an established financial institution. Popular Bank, founded in 1893, is one of the largest banks in the United States. They offer a range of CD terms, from three months to five years, as well as high-yield savings and money market accounts. 

PNC Bank: 5.05% APY

• 3-month APY: 5.05%
• Minimum initial deposit: $1,000
• Early withdrawal penalty: All earned interest

PNC Bank offers a 3-month CD with 5.05% APY and a minimum deposit requirement of $1,000. Remember that the early withdrawal penalty is all the interest you’ve earned – higher than other banks. 

With over 2,600 branches across 19 states and the District of Columbia, PNC Bank is one of the largest banks in the United States. 

Alliant Credit Union: 4.25% APY

• 3-month APY: 4.25%
• Minimum initial deposit: $1,000
• Early withdrawal penalty: All earned interest 

Alliant Credit Union doesn’t offer the highest APY, but 4.25% is still decent. This CD also has a lower initial deposit requirement of $1,000. 

Alliant Credit Union is one of our top picks for credit unions. They offer various CD terms, checking and savings accounts, loans, and investment products.

Membership is available to employees and retirees of certain organizations, as well as anyone who makes a $5 donation to Foster Care to Success, a nonprofit organization that supports foster youth.

First Internet Bank of Indiana: 4.14%

• 3-month APY: 4.14%
• Minimum initial deposit: $1,000
• Early withdrawal penalty: 90 days' interest 

First Internet Bank of Indiana offers a 3-month CD with a rate of 4.14% APY and a minimum deposit requirement of $1,000. This online bank, founded in 1999, was one of the first fully digital banks in the United States and has since grown to become a leading provider of online banking services.

First Internet Bank of Indiana also offers a variety of other banking products, including checking and savings accounts, loans, and investment products. 

EverBank: 3.95% APY

• 3-month APY: 3.95%
• Minimum initial deposit: $1,000
• Early withdrawal penalty: One-fourth of the total interest that would have been earned

EverBank, a division of TIAA Bank, offers a 3-month CD with a rate of 3.95% APY and a minimum deposit requirement of $1,000. One key feature is their automatic renewal option, which allows customers to "set and forget" their CD.

Once your CD matures, EverBank will automatically renew it for another three months. This makes it a solid option to help you grow your money over the short term. Plus, EverBank offers one of the best savings accounts on the market. 

Should you invest in a 3-month CD? 

Advantages 

A 3-month CD can be a smart choice if you want to earn a competitive interest rate on your money in the short term. Benefits include:

• Competitive interest rates: Currently, the best CDs are paying up to 5% APY — some of the highest in years. Locking in a high fixed rate of return will lead to greater savings than a traditional savings account might.
• Low risk: Most CDs are FDIC-insured (or NCUA-insured for credit unions), up to $250,000 per person, per account.
• Short-term commitment: With a 3-month CD, you're only committing your funds for a short period, which can be ideal if you're unsure about tying up your money or if you think you’ll need access to your funds in the near future.
• Predictable returns: CDs offer a fixed interest rate throughout the term. That means you'll know exactly how much you'll earn over the three months.

Disadvantages 

While 3-month CDs can be a solid short-term savings option, there are also some potential drawbacks to consider, including:

• Lower rates than longer-term CDs: While 3-month CDs often offer higher rates than savings accounts, they typically have lower rates than longer-term CDs. If you're willing to commit your funds for a longer period, you may be able to earn a higher return.
• Early withdrawal penalties: If you need to withdraw your funds before the end of the 3-month term, you may face early withdrawal penalties, which can eat into your earnings.

What to consider when choosing a 3-month CD

Once you’ve decided on a 3-month CD, be sure to shop around for the best CD rates available. Here are some other factors to consider:

• Minimum deposit requirements: Each bank or credit union has a minimum deposit requirement for opening a 3-month CD. Be sure to choose a bank with a minimum deposit that aligns with your investment goals and budget.
• Bank reputation: Choose a reputable bank or credit union with a strong track record of financial stability. 
  Banking services: Consider other services the bank offers, such as checking and savings accounts, loans, and investment products.
• Renewal options: Keep in mind some banks will automatically renew your CD when the term is up — which will lock up your money for another three months if you don’t withdraw the money at the maturity date or during the grace period. 
• Special features: Some institutions will let you bump the interest rate up if they offer better rates after you begin your CD’s term. Others may let you add more money to your CD after the term starts, which can increase the interest your account earns. 

Alternatives to 3-month CDs

While 3-month CDs can be a good option for short-term savings, they're not the only choice available. Here are some alternatives to consider:

• High-yield savings accounts: Some online banks and credit unions offer high-yield savings accounts with interest rates that are the same or even higher than 3-month CD rates. These accounts offer more flexibility than CDs, as you can withdraw your money anytime without penalties.
• Money market accounts: Money market accounts are similar to savings accounts but often come with higher interest rates and check-writing privileges. Like high-yield savings accounts, they offer more liquidity than CDs.

The bottom line 

When you have a very short time horizon, a 3-month CD can be useful to earn some interest on your savings without much risk. You won’t be able to withdraw your money during the CD’s term without paying a penalty, but if you have a predictable timeline, it can be worth it.

You can find the right account by comparing the rates, minimum deposit requirements, and other key features of the top banks and credit unions offering 3-month CDs. 

Editorial disclosure: Opinions expressed are author's alone, not those of any bank, credit card issuer, or other entity. This content has not been reviewed, approved, or otherwise endorsed by any of the entities included in the post.