The best 3-year CD rates: Earn up to 4.80%

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Looking for a safe, reliable way to grow your savings? A 3-year certificate of deposit (CD) could be the perfect solution. These accounts offer guaranteed returns over a 36-month term, with higher interest rates than traditional savings accounts.

These accounts work best for goals you plan to achieve in the next few years, like saving up for a down payment, wedding, or home remodeling. 

What are the best 3-year CD rates currently available? Our research shows that the top rates range from 4.15% to 4.80% annual percentage yield (APY) as of  2024. These rates are offered by a mix of online banks, credit unions, and community banks.

What are the best 3-year CD rates? 

Here are some of the best 3-year CD rates we’ve seen, much higher than the national average of 1.42% annual percentage yield (APY).CD rates are accurate as of April 2024.

First National Bank of America — 4.80% APY

First National Bank of America, a community bank headquartered in East Lansing, Michigan, stands out with an exceptionally high 3-year CD rate of 4.80% APY. This is currently one of the top yields you'll find anywhere for a 36-month certificate of deposit. 

To open a 3-year CD with First National Bank of America, you'll need a minimum deposit of $1,000. This is fairly standard among community banks, though some online banks and credit unions have lower $500 minimums. 

One advantage of First National Bank of America is that interest on your 3-year CD compounds daily, ensuring you earn the maximum return on your savings. Many other banks only compound monthly or even annually.

First Internet Bank: 4.66% APY

Due to the lower operational cost, online banks often offer higher CD rates than brick-and-mortar banks. First Internet Bank is an excellent example of this. Its competitive 3-year CD offers an impressive 4.66% APY. This bank's commitment to offering competitive rates makes it a good choice to grow your savings securely.

BMO Alto: 4.50% APY

If you have less to invest, consider BMO Alto’s 3-year CD. There’s no minimum initial deposit, and you can earn a steady and competitive return on your funds. Remember that there is a high early withdrawal penalty, so be sure only to save what you won’t need for three years. Interest on the 3-year CD is paid monthly.

If you’re looking for a shorter-term option, BMO offers a high-yielding 6-month CD that’s one of the best on the market.

Popular Direct: 4.55% APY

Popular Direct, the online banking arm of Popular Bank, is currently offering a very competitive 4.55% APY on its 3-year CDs. 

To open a Popular Direct 3-year CD, you'll need a minimum deposit of $10,000. This is significantly higher than many other banks, which often have minimums of $500 or $1,000. However, if you have a larger sum to invest and want to maximize your guaranteed return, Popular Direct is a strong choice. 

As an online bank, Popular Direct allows you to easily open and manage your 3-year CD through its website and mobile app. You can fund your account via electronic transfer from another bank, wire transfer, or check.

Quontic Bank: 4.40% APY

Quontic Bank, an online-only bank based in New York, currently offers a very competitive 3-year CD rate of 4.40% APY. 

Quontic's 3-year CDs have a minimum deposit requirement of $500, which is fairly typical. Interest on the account compounds daily to maximize your earnings.

Quontic does impose an early withdrawal penalty of 24 months' interest if you need to access the funds before maturity. 

In addition to strong CD rates, Quontic Bank also offers additional banking products like checking and high-interest savings accounts.

America First Credit Union: 4.35% APY

America First Credit Union, based in Utah, offers members a 3-year CD with an attractive rate of 4.35% APY. You only need $500 to open the account and the interest compounds daily. 

As with most credit unions, you need to meet certain eligibility requirements to join America First. The easiest way is to make a $5 donation to the America First Charitable Foundation. Then you can apply for membership and open a 3-year share certificate. 

If you need to make an early withdrawal from an America First 3-year CD, the penalty is relatively steep at 365 days' worth of interest. But this is on par with many other credit unions.

Alliant Credit Union: 4.20% APY

Chicago-based Alliant Credit Union offers a 3-year certificate with a competitive 4.20% APY. You'll need at least $1,000 to open this account, which is a bit higher than some other banks and credit unions. 

Interest on Alliant's 3-year CDs also compounds monthly, which is slightly less frequent than competitors. Alliant does have an above-average early withdrawal penalty of 360 days' interest. 

To join Alliant Credit Union, you'll either need to work for or be retired from a qualifying employer, live in specific parts of the Chicago area, or be a member of certain organizations. If none of those apply, you can join Foster Care to Success for $5 and then open an account.

Marcus by Goldman Sachs: 4.15% APY

Marcus is the online consumer banking arm of investment giant Goldman Sachs. It consistently offers some of the highest CD rates in the market, with its 3-year CD currently offering 4.15% APY. 

You can open a Marcus 3-year CD with a minimum deposit of $500. Interest is compounded daily and paid monthly to your account. Marcus also offers a 10-day CD rate guarantee: If rates go up within 10 days of opening your CD, you'll automatically get a higher rate. 

One nice feature of Marcus CDs is the flexibility to withdraw your full balance within the first 7 days after the CD matures. The early withdrawal penalty on a Marcus 3-year CD is 270 days' interest.

Why 3-year CDs are attractive right now

Because the Federal Reserve rapidly raised interest rates over the past few years, 3-year CD rates are at relative highs. 

The average 3-year CD has an APY of 1.40%, according to the Federal Reserve. But the best 3-year CDs offer rates over 4% APY. 

To put this in perspective, a $10,000 deposit into a 3-year CD at 4.50% would earn approximately $1,400 in total interest over the 36-month term. This far exceeds the paltry $300-$750 you would have earned in a 3-year CD just a few years ago. 

For savers looking to lock in a high guaranteed return without the volatility of the stock market, 3-year CDs are very appealing right now.

Benefits of a 3-year CD

Why consider a 3-year CD for your savings goals? Here are some of the key benefits:

Higher interest rates

Three-year CDs typically offer higher interest rates than traditional savings accounts or shorter-term CDs. This is because you're agreeing to lock your money away for a longer period, which allows the bank or credit union to invest those funds for a higher return.

Guaranteed returns

When you open a 3-year CD, you know exactly how much interest you'll earn over the life of the account. This makes CDs a low-risk investment option, as your returns are not subject to market fluctuations like stocks or bonds.

FDIC or NCUA Insurance

Most 3-year CDs are insured by either the FDIC (for banks) or NCUA (for credit unions) up to $250,000 per person, per account. This means your principal and earned interest are protected even if the bank or credit union fails.

Longer-term savings

A 3-year CD can be a smart choice for savings goals that are a few years away, such as saving for a down payment on a house, planning a wedding, or funding a child's education. The 36-month timeline allows your money to grow while keeping it accessible in the relatively near future.

How CD interest is calculated

When comparing 3-year CD rates, it's important to understand how interest is calculated and credited to your account. Here are a few key concepts to know. 

Annual percentage yield (APY)

When you open a certificate of deposit, your bank will disclose the interest rate and annual percentage yield (APY). 

The APY represents the total amount of interest you'll earn on a CD over one year based on the interest rate and compounding frequency. APY assumes that interest is reinvested back into the account.

Compounding frequency

Compounding refers to how often interest is calculated and added to your CD balance. Most banks compound interest daily or monthly. The more frequently interest compounds, the faster your savings will grow. 

Here's an example of how compounding frequency affects the total interest earned. Here's how much interest you would earn with $10,000 on 3-year CD with a 4.50% interest rate: 

• Daily compounding: $1,432.48 
• Monthly compounding: $1,428.84 
• Annual compounding: $1,417.74 

As you can see, daily compounding results in the highest total return, but the differences are relatively small. The interest rate itself has a much bigger impact on your earnings.

What happens when your 3-year CD matures

When your CD matures, you typically have a short grace period (usually 7-10 days) to decide what to do with the funds. Here are your options:

1. Cash out the CD: You can simply withdraw the full balance of principal and interest and transfer the funds to your linked checking or savings account.
2. Renew the CD: Most banks will automatically renew your CD for another 3-year term at the current interest rate if they don't hear from you during the grace period. 
3. Change CD terms: The grace period also gives you the opportunity to switch to a different CD term. For example, if you expect rates to rise soon, you might prefer to renew into a 1-year CD. Or if you're nearing retirement, you might choose an IRA CD to defer taxes longer. 

It's important to track your CD maturity dates. If you forget and the bank automatically renews your CD, you may be locked in at a lower rate for another three years. 

CD Ladders and 3-Year CDs

One popular strategy for CD savers is building a CD ladder. This involves dividing your investment across multiple CDs with staggered maturity dates.

For example, instead of putting $25,000 into a single 3-year CD, you might open five CDs of $5,000 each, maturing in 1, 2, 3, 4, and 5 years. As each CD matures, you would renew it into a new 5-year CD to keep the ladder going.

The benefits of a CD ladder include:

• Higher rates: By including longer-term CDs, you can lock in higher rates for a portion of your savings.
• More frequent access to funds: With CDs maturing annually, you have the opportunity to withdraw some money each year if needed without penalty.
• Flexibility: Staggering your CD maturities allows you to adjust your strategy as interest rates change. For example, if rates are rising, you can reinvest into higher-yielding CDs as each rung of the ladder matures.

In a CD ladder, 3-year CDs can provide a good middle ground between short-term liquidity and long-term growth. They offer higher rates than 1- or 2-year CDs while still keeping a portion of your savings accessible in the relatively near future.

The bottom line

A 3-year CD can be a smart choice for savers who want a guaranteed return and are comfortable locking away their money for a few years. With interest rates at their highest levels in over a decade, now is an excellent time to shop around for the best 3-year CD rates.

Editorial disclaimer: 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.