I'm About to Open a CD. Here's Why I'm Not Going for the Absolute Highest Rate

CD yields are at their highest level in more than 15 years, and the expectation of Federal Reserve rate cuts could make it a smart idea to act quickly to lock in today's interest rates. And while interest income is a big motivating factor when it comes to opening a CD, it isn't the only thing that you should consider.

For example, some of the banks offering the best CD rates in the market have high minimum deposit requirements. Some only offer high rates on one or two different term lengths. And quite frankly, some of the banks with the absolute highest CD yield are a little inconvenient to use.

I'm planning to open a CD soon to lock in an APY before rates start to fall, and I've already crossed the highest-paying banks off my list. Here are three reasons why.

1. I want to build a CD ladder

To be perfectly clear, I've narrowed down my search for CD banks to a short list, but I haven't made a final decision just yet.

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Product	APY	Min. to Earn
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Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

One of the biggest reasons I've crossed certain banks off the list is that many don't offer a wide variety of CD term lengths. Some offer a full menu of CD choices, but only offer high rates on one or two.

I plan to use a CD ladder, not just one CD. If you aren't familiar, a CD ladder involves dividing your money into equal amounts and using it to open CDs of various maturity lengths. I plan to use 1-year, 2-year, 3-year, 4-year, and 5-year CDs, and I don't want to divide my money among several different banks. So, I'll need to find a bank that offers CDs with competitive interest rates for all five of those term lengths.

2. I value convenience

To put it in simple terms, some of the highest-yielding CDs come from banks that are rather inconvenient to use. Maybe they have very limited customer service. Maybe they only give you one option to deposit money into the account. Or maybe they make it difficult to find important information, such as the withdrawal process when the CD matures.

While I want a high yield, I'm willing to give up a little bit of it in exchange for convenience. I want to be able to deposit money via mobile check, bank transfer, or other methods. I also want to be able to call and talk to a person if I need help with my account. These factors are playing a major role in my decision.

3. I want a great banking app

Last but certainly not least, I will eliminate a bank from consideration immediately if it has a clunky mobile app, or a lack of a mobile banking app entirely. As mentioned, I'm planning to construct a CD ladder of five different CDs, and I want to be able to see and manage my accounts quickly and easily from wherever I am.

Of course, there are bonus points if I already use a bank and its app in some capacity. Between personal bank accounts, investments, business accounts, and more, I already have a relationship with four different financial institutions (although none offer great CD rates as of this writing).

The bottom line

If you're willing to jump through hoops, and getting the highest possible interest rate is a big priority for you, there's nothing wrong with targeting the CD that offers it. However, it isn't the best move for everyone -- after all, that's why not everyone who opens a CD chooses the highest interest rate in the market.