How to Earn 5.20% Right Now on a LendingClub 10-Month CD

A lot of experts think the Fed will drop rates in September. If this is the case, then now is the best time to lock in current high CD rates before they get cut in the coming months.

One of the highest CD rates I've seen recently is from LendingClub, which offers a 10-month CD at 4.00% APY. Not only is this rate very competitive, but you don't need to jump through any hoops to get it.

Please note, while rates are accurate at time of publication, they are subject to change at any time. It's best to check the issuer's website for the most up-to-date rate information.

Open a 10-month CD with at least $500

All you need to do to get this advertised rate is open a 10-month CD with a deposit of at least $500. (This is the minimum deposit for all LendingClub CDs.)

That's it.

You can open a LendingClub CD online in minutes -- or faster if you already have a LendingClub account. You can fund your CD through an online transfer from an eligible bank account.

Don't touch your CD until it matures

Once you've opened your LendingClub CD, make sure you leave the money alone the full 10 months until the account matures. This is how you maximize your earnings.

There are two important reasons why.

1. LendingClub CDs compound monthly

You accrue interest on your CDs throughout the maturity period. Most CDs, including LendingClub, add accrued interest to your balance on the last business day each month.

Once the interest is added to your balance, it will also be eligible to earn interest. So, your balance will grow each month, earning you more interest the next month.

If you withdraw your interest -- or worse, part of your principal -- you lose out on the magical power of compound growth, and you'll earn less over the life of the CD.

2. LendingClub CDs have an early withdrawal penalty

Another big reason to avoid withdrawing any part of your principal before the CD matures is the penalty fee: LendingClub charges a withdrawal penalty of 90 days simple interest for CDs with terms of one year or less.

This could seriously eat into the overall rate of return you earn on the CD.

If you really want to withdraw your interest earnings, you can do so by opening a LendingClub checking or savings account. Then you can withdraw interest (and only interest) without the penalty.

When it matures, it's decision time

You'll get an email from LendingClub 30 days before your CD matures. (Personally, I'd also set some phone calendar reminders, because I don't read every email.)

Once your CD matures, you'll have 10 days to withdraw your funds and close your CD.

If you don't do anything, your money will automatically roll over into a new CD with the same maturity term. The rate you receive will be based on LendingClub's current rates for that term.

Should you renew your LendingClub CD?

Whether you renew will depend on two important things:

1. Do you need the money for something else? If yes, then just withdraw your funds during the 10-day grace period and enjoy your earnings. If no, then go to question two.
2. What are the current rates? If LendingClub CDs still offer competitive and profitable rates, then I'd probably let mine renew. If I can get a better rate elsewhere, then I'd withdraw funds and move on.

LendingClub has some great CD rates right now. But that may not be the case next month -- or next year. If you have the funds to invest in a competitive CD, now would be a good time to check it out.