As long as you have at least $1,000 to set aside for six months, that you know you won’t need access to, then putting it into a CD Account with an online Bank is a great option. The top CD interest rates are the ones that are at least 0.35% and have daily compounding to maximize the earning potential.

A CD account, or Certificate of Deposit, is a type of savings option with a term attached. The term limit can be anywhere from 3-months to 5-years. You must agree to keep the money in the account for that amount of time, as there will be a penalty fee for “early withdrawal.” To prevent that from happening, don’t put all of your savings into a CD term account. Have some set-aside either in a traditional savings account or even in cash just if there is ever an emergency.

Like a savings account, CDs are usually safe because the FDIC backs them. How do you know which bank to join? First of all, online banks are the best since they offer higher interest rates (usually compounding) and APY percentages (per year). It is ideal to stick with a bank that offers one of the top CD interest rates. However, it would be best if you also considered other factors. Such factors include customer service, minimum deposit requirement, ease of setting things up, and a locked-in rate.

Top CD Interest Rates And Locked-In Rates

There are a plus side and a downside to a locked-in rate. On the one hand, you won’t benefit if the rate goes up during the term. The plus side is that you won’t have to worry about it going down, either. Market volatility and fluctuations won’t affect how much interest your account earns.

What happens at the end of the term? Some banks automatically renew CDs for a second term upon maturity. You’ll have to request the cash plus all of the interest you earned if you don’t want to continue with that particular bank. One strategy is to take the money out and put it into another bank that offers the top CD interest rates. This choice is the best option if the original bank’s interest rate on that term is lower than what it was when you first put the money in. You wouldn’t want to be locked-in to a lower rate for the second term.

Know precisely ahead of time what the end date for the term will be so that you’ll know whether to take the money out or leave it in for automatic renewal.

Here are some of the online banks that offer high CD interest rates right now:

• Limelight Bank
• MySavingsDirect
• Navy Federal Credit Union
• Live Oak Bank
• CIT Bank

These options offer the top CD interest rates, and the FDIC or National Credit Union Administration insures them. In particular, CIT Bank is a great choice. It is versatile in its offerings and has the best customer service you can expect from an online bank.