Figuring out where to deposit your lump sum of money can be more complicated than saving it in the first place! There are so many banking institutions and promotions on offer, all loaded with fine-print. Each account promises to grow your funds, but at what cost?
If you’re looking to earn interest on some savings and feeling overwhelmed about your options, these are the best fixed deposit account rates for 2023.
Fixed Deposit Accounts, Simplified
A fixed deposit (FD) is a type of savings account where you deposit a sum of money for a fixed period of time and earn interest. In the United States, it’s commonly called a certificate of deposit (CD).
Generally, the duration of a FD or CD ranges from one month to ten years, depending on your goal for the account. If you’re saving for a short-term goal, like a holiday, a variety of short-term accounts are available. Alternatively, you can select a long-term account for faraway expenses like retirement. The interest rate offered on a fixed deposit account usually increases with the length of the tenure.
Signs Of A Good Account
Let’s take a quick overview of the features that define a good fixed deposit account. A good fixed deposit account should offer a competitive APY (Annual Percentage Yield), which is much higher than a regular savings account. The account should also be secured by a reputable financial institution.
A good FD or CD should allow for partial withdrawals or premature closures without significant penalties. They should never restrict access to your funds through online banking, either. Here are the best fixed deposit accounts of 2023 so far.
Capital One
Capital One is reliably competitive with their savings accounts, offering nine terms of CDs that range from six months to five years. They offer a 5.00 percent APY for an 11-month term, with no minimum deposit required.
The penalty for an early withdrawal depends on the term length. However, CDs less than one year will be penalized three months of interest, whereas CDs longer than one year will be penalized six months of interest.
Marcus
Marcus, an online financial platform by Goldman Sachs, offers high-yield CDs that can be opened within minutes. Conveniences aside, they offer a 4.40 percent APY on a 12-month term. If the rate improves within the first ten days of your account being opened, Marcus will even adjust your CD to the better rate.
Having said that, the platform requires a $500 minimum deposit. It also charges steep penalties for early withdrawals. Marcus penalizes three months’ worth of interest for terms less than one year, or nine months’ worth for terms between one to five years. If you withdraw early on a six-year CD, you’ll be penalized a whole year’s worth of interest.
CIT Bank
The quality of FDs and CDs at CIT Bank varies significantly. Some accounts offer high yields while others dip below the national average. As a new customer, however, you could be in the best position to save. CIT Bank grants new customers access to their assortment of standard, jumbo, and no-penalty CD options. They also offer 4.65 percent APY on a 13 month term.
The $1,000 minimum requirement on their standard CDs isn’t ideal for everyone. Moreover, their jumbo CDs don’t yield ‘jumbo-sized’ earnings when compared to the typical fare at other banks. However, their no-penalty CDs are a quality offer, allowing customers to withdraw their funds early without incurring a hefty fine.
Synchrony
Synchrony might not have the brand-name recognition of the other companies on this list, but they’re still a major player in U.S. banking. And their CD offer is not to be missed: 4.60 percent APY on a 14-month term, with no minimum deposit.
This deal leads to higher interest earnings than the aforementioned competitor offers. Plus, Synchrony features flexible bump-up options on their CDs. While there’s no early withdrawal penalty on the interest accumulated, standard penalties apply to the principal amount.
Be Mindful Of The Fine-Print
Certain criteria must be met before you can trust a bank with your hard-earned money. Most importantly, any fixed deposit account you choose should offer a high APY. You can also look to a CD’s compounding frequency to predict a higher return, as accounts that compound more frequently develop more interest.
Make sure that your funds are insured, either by the FDIC (Federal Deposit Insurance Corporation) or the government. You’ll also want to have access to your funds at all times, in case of an emergency. Finally, try to avoid monthly maintenance fees and account minimums, since these will diminish your returns.
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