Best 2-year CD rates for October 2023

If you’re willing to consider an online bank, the best 2-year CD rates currently hover around 5.00% APY, so you can earn a respectable return while keeping your money safe in a low-risk investment. 

Of course, the highest 2-year CD rates might come with a minimum deposit that’s out of reach or an early withdrawal penalty that’s too steep. So, be sure to consider each CD’s pros and cons before deciding. Here’s a rundown of some of the highest APYs available to help you lock in the best 2-year CD rate.

While CDs are typically known for their guaranteed return, Newtek offers a 24-month variable rate CD. At the moment, it’s not only Newtek’s highest APY offering, but also one of the highest CD APYs anywhere. There are two catches, however: the high minimum deposit and the fact that the rate could just as easily drop — and you’d have to pay an early withdrawal penalty if you decide to take your money out before the maturity date.

• One of the highest interest rates available on 2-year CDs.
• The variable rate pays 0.10% more than what the U.S. Treasury pays. 

• The minimum deposit may be prohibitively high for some savers.
• The maximum deposit is $220,000.
• The monthly rate can go up or down depending on market conditions.
• The early withdrawal penalty is 180 days of interest. 

Amerant Bank: 5.25% APY (for Florida and Texas residents only)

Amerant offers an excellent APY on its 2-year CD — if you live in Florida or Texas. You can still open a CD with the bank if you live elsewhere, but the APY will be 2.75%. That’s a decent APY, but right now other banks are offering higher rates.

• The 5.25% APY is available to Florida and Texas residents only (it’s 2.75% APY for all others).  
• The minimum deposit is higher than many banks.
• The early withdrawal fee is 180 days of interest. 

Merrick Bank is better known as a consumer financing service for the recreation industry, in addition to being a credit card issuer — in fact, it’s one of the top 20 in the U.S. But if you can afford the high minimum deposit requirement, it also offers an excellent APY on its 24-month CD.

• The minimum deposit may be prohibitively high for some savers.
• The early withdrawal penalty is 180 days of interest. 

Minimum deposit: $10,000 

Interest compounds daily on Popular Direct’s CDs, which gives your money an even greater opportunity to grow. However, the $10,000 minimum deposit is on the high side for many savers.

• Interest compounds daily.
• Customer service is available 24/7 by phone.

• The minimum deposit is higher than most online banks.
• The early withdrawal penalty is 270 days of interest.

Minimum deposit: $1,000 

This online banking pioneer offers a generous 4.85% APY on its 24-month CDs — though you’ll want to be positive you can leave your money in place for the full term. The early withdrawal penalty is a hefty 360 days of interest.

• The website has transparent product information. 
• Opening an account is quick and easy.

• The minimum deposit is higher than some online banks. 
• The early withdrawal penalty is 360 days of interest, the steepest we’ve seen.

Minimum deposit: $1,000 

With an early withdrawal penalty of just 30 days interest, CIBC’s 24-month CD provides a particularly low-risk avenue for earning a high APY. And, if you can part with $25,000 or more, the APY goes up to 4.80%.

• The early withdrawal penalty is 30 days of interest, the smallest we’ve seen.
• You can earn a slightly higher rate (4.80% APY) on balances of $25,000 and up.

• The website could be easier to navigate.
• The mobile app is poorly rated.

When you think of American Express, you probably think credit cards. But it’s also a bank offering a number of savings options. The 24-month CD offers a generous 4.75% APY with no minimum deposit requirement, making it an accessible option for any saver.

• The $0 minimum deposit means anyone can save. 
• Customer service is available 24/7. 

BMO Alto offers a practical 24-month CD with a 4.75% APY and no minimum deposit requirement. You can even get monthly interest payouts, if you’d like, though you’ll ultimately earn more if you leave the money in place and allow interest to compound.

• The $0 minimum deposit means anyone can save.
• You can choose monthly interest payouts.
• Customer service is available 24/7 by phone.

• BMO Alto customers can’t use BMO Harris branches.
• BMO Alto doesn’t have an app, so you have to use the BMO Alto website.
• The early withdrawal penalty is 180 days of interest.  

The U.S. division of Barclays is online only and offers a variety of savings vehicles, including high-yield savings accounts and high-yield CDs. The 24-month CD provides a solid return on whatever amount of money you choose to lock in. 

• The $0 minimum deposit means anyone can save.
• You can choose monthly interest payouts.

Minimum deposit: $1,000 

Alliant Credit Union has a generous membership policy that allows anyone to join, so long as they join the nonprofit Foster Care to Success — Alliant will even pay your one-time $5 membership fee. (You can also become a member of Alliant if you work for one of its partner organizations or live in the Chicago area, among other routes.)

• Unlike many credit unions, anyone can become a member. 
• Standard, jumbo, and IRA certificates are available.

• The minimum deposit is higher than some online banks.
• The early withdrawal penalty is 180 days of interest.

Capital One offers a hybrid of the big bank experience with the rates of an online bank. It runs nearly 500 physical branches in nine states, if you want an in-person experience. Yet the 24-month CD offers a relatively high APY with no minimum deposit requirement.

• A $0 minimum deposit means anyone can save. 
• You can choose monthly interest payouts. 
• The mobile app is highly rated.

• You can find slightly higher rates elsewhere.
• The early withdrawal penalty is 180 days. 

Synchrony takes some of the guesswork out of trying to lock in the best CD rate. Its 24-month CD comes with a bump-up option, so if rates increase during your term, you have the one-time option of moving up to a higher APY.

• Bump-up, no-penalty, and IRA CDs are available.
• The mobile app is highly rated. 

• You can find slightly higher rates elsewhere.
• The early withdrawal penalty is 180 days of interest.

All you need to do to become a member of Bethpage Federal Credit Union is open a savings account and deposit $5. That gives you access to its 24-month certificate with a solid APY and low minimum deposit requirement. 

• Unlike many credit unions, anyone can become a member.
• The minimum deposit is lower than many online banks. 

• You can find slightly higher rates elsewhere.
• The early withdrawal penalty is 180 days of interest.

A 2-year CD is a certificate of deposit (or “share certificate” at a credit union) that matures in 24 months. Once you open and fund a CD, you generally earn a fixed interest rate and can’t deposit or withdraw any cash during the term. 

If you need your money before the CD matures, you have to withdraw the entire amount and pay an early withdrawal penalty. Depending on the bank, the early withdrawal penalty may range from 30 to 360 days for a 2-year CD. (There are times, however, when an early withdrawal penalty might be worth it.)  

As with all CDs, you’ll find the best rates at online banks and credit unions. 

APY, or annual percentage yield, is a percentage reflecting the total interest you’ll earn on money in a bank account in one year based on the interest rate and the frequency of compounding. Because APY factors in compounding, it’s always a little higher than the interest rate, providing a clearer picture of earnings over time. 

Savings accounts, money market accounts, CDs, and some checking accounts have APYs. You can use an online calculator to see your potential earnings based on your balance, the interest rates, and how often the interest compounds (e.g., daily, monthly, or annually). 

The higher the APY, the more your money can grow. However, remember that APY represents what you earn in a year. If you withdraw your money sooner (or have a short-term CD), you’ll earn less than the full APY. 

A 2-year CD makes sense if you have a mid-term savings goal, such as a dream vacation or sending a child to college, and you can afford to keep your money locked up for 24 months. It’s also worth considering if you want to create a CD ladder, a savings strategy where you buy multiple CDs with staggered maturities. 

A standard CD ladder consists of five CDs (the “rungs”) with terms of one, two, three, four, and five years. As each CD matures, you can cash it out if you need the money or renew it and continue building the ladder. 

When you open a CD, it’s helpful to have a plan for how you’ll use the money and a timeline for when you’ll need it. Short-term CDs, such as 6-month and 9-month CDs, provide greater flexibility, so they can be a good fit if you have a short-term financial goal and need access to your cash relatively soon. Longer-term CDs, including 3-year, 4-year, and 5-year CDs, make sense if your goal is further out (e.g., retirement or college savings) and you won’t need the cash anytime soon.   

Keep in mind that CD interest rates can vary widely by term. For example, a bank might offer a 5.00% APY on a 9-month CD and just 2.50% APY on a 3-year CD. Once you pick your ideal timeline, compare rates for CDs with terms close to it, and then choose the CD with the best rate and a minimum deposit that works for your budget. 

You can add money to a CD when you open and fund the account or when you renew it. Otherwise, you’ll have to open a separate CD to add to your overall CD balance (you might find better rates if you switch banks). 

Many high-yield savings accounts offer APYs that align with CD rates, so that may be an option if you want a safe place to park your cash and greater flexibility. For another low-risk investment, consider a Series I savings bond.

The Federal Reserve’s monetary policy decisions are key drivers of interest rates. Since starting a rate-hiking campaign in March 2022 to curb inflation, the Fed has raised interest rates 11 times. While the Fed declined to increase rates at its most recent meeting in September, it signaled it may raise interest rates once more in 2023. If that happens, CD rates would likely increase slightly before projected rate cuts start in 2024. 

Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.

This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at [email protected].