These 3 CDs All Offer Rates Above 5.00% Right Now. Does It Matter Which One You Pick?

If you're looking for a CD with a high APY (annual percentage yield), you have a lot of options right now. That's a good thing. But it can make it harder to pick which one is best.

To help you out, here are a few different potential choices worth considering, along with some tips on how to decide which is best. By taking a look at these three offerings, you can see that it absolutely does matter which CD you select, even when their rates are similar.

1. Capital One 360 CD

Capital One is currently offering a special 10-month CD with a 5.10% APY as of April 9, 2024. There's no minimum balance required to invest and the CD is FDIC insured, so you can't lose money as long as your deposit doesn't go over FDIC insurance limits. Other key features include:

• Interest that accrues daily
• Prepayment penalties that apply if you withdraw funds early

This special CD is a promotional one offered for a limited time. This means Capital One may not keep this offer going for long. Investing in this CD is the right choice if:

• You have money ready to go right now, or before the promotional offer ends.
• You're OK with tying up your funds for 10 months, so you can avoid early withdrawal penalties.
• You believe CD yields will stay pretty high for a while. That's because investing in this 10-month CD means giving up the opportunity to choose a CD with a longer term that will guarantee you can keep your 5.10% rate for a while even if rates fall.

2. Synchrony Online CD

Synchrony Bank currently has one CD offer above 5.00% and it's a 6-month CD. It's paying 4.80% APY as of April 9, 2024. There's also no minimum balance required to open this CD, and it comes with FDIC insurance coverage to eliminate risk.

Some of the other key features of this CD include:

• An early withdrawal penalty equal to 90 days of simple interest at the current rate
• Interest you can withdraw at any time during the CD term
• Interest that compounds daily and is paid monthly

It's worth noting that while this isn't listed as a promotional CD, Synchrony explains that the bank gives you the interest rate effective on the day you open your CD as long as your payment is received and processed on or before 15 days from the time you open it. So, if rates change before you act, your CD may be at a different rate.

The CD term on this investment is also a short one. So, while you get a slightly higher APY, it may not be worth giving up extra time that your rate is guaranteed -- especially as the Federal Reserve (the U.S. central bank) has indicated it may reduce rates this year, and CD rates are likely to fall if that happens.

3. Alliant CD

Alliant is currently offering the highest rate of any of the three options on this list, and the longest term. You can open a 12-month CD with a 5.15% rate. If you have a jumbo deposit of $75,000 or more to make, you can bring that rate up to 5.20%.

There are two big catches, though. First, you must make a $1,000 minimum deposit. And second, you must become an Alliant Credit Union member. To be eligible for membership, you must be affiliated with a partner business or organization, be related to a current Alliant member, live near corporate headquarters in Chicago, or become an Alliant Credit Union Foundation digital inclusion advocate.

Other notable features of the CD include:

• An early withdrawal penalty equal to the number of days the CD is open, with a maximum of 90 days
• Dividends that compound monthly
• Dividends that can be withdrawn monthly

With the longest term and the highest APY, this is the best option if:

• You are worried about interest rates going down
• You want to maximize your yields
• You have $1,000 to invest
• You're OK with becoming a credit union member

If you can't meet the minimum deposit requirement or don't want to lock your money up for 12 months, it's not the right choice.

Does it matter which CD you pick?

All of these CDs are great options paying competitive rates. But as you can see, it does matter which one you pick. You should:

• Pick the Alliant CD if you have at least $1,000 to invest, can lock up your money for a year, and believe rates are going down so you want a longer CD term.
• Pick the Synchrony CD if you don't have $1,000, want a higher rate, and are willing to accept a shorter CD term to get it
• Pick the Capital One CD if you are OK with accepting a slightly lower rate than Synchrony in order to lock in your rate for an additional four months.

And, if none of these make sense for your situation, you can also check out The Ascent's guide to the best CD rates available now to find a different certificate of deposit that's right for your situation.