You Can Boost Your Savings 3.5% by Switching to These Popular CDs

The story goes like this. Rates are high, so you check your bank's CD rates. They're abysmal -- with APYs lower than 1.00%, even. But you've got the power of friendship on your side. A friend swoops in with a hot tip, and you open a CD account at a completely different bank.

The rate: 1.50%. Nearly twice as good as your regular bank's CDs. What a steal of a deal! And just in time, too, what with the Fed predicting at least one rate cut this year and more to follow n 2025. By opening a certificate of deposit (CD), you lock in great rates for months or even years.

As you're patting yourself on the back, you see it. An advertisement for an online CD with a rate more than three times as high as the one you just opened. What do you do? Do you open yet another CD at bank number three? Do you erase the memory from your brain and go to bed?

Ah, the old I-didn't-see-it-until-it-was-too-late trick. Happens to the best of us. The only way to avoid it is to start with the banks offering the best CD rates first, then go from there.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of December 28, 2024. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of December 28, 2024. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
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 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 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.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 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.

Three banks with the best CD rates

Three banks popular for excellent CD rates are Barclays, Discover® Bank, and Western Alliance Bank. They offer rates up to 3.50% higher than the national average.

Barclays Online CDs offer terms from six months to five years. One of their best offerings is the 1-year CD, which locks in a whopping 4.15% APY for the term. You can open Barclays Online CDs with as little as $1 -- there are no deposit minimums.

Discover® Bank CDs are wider than a dinner table and heavy with interest. Rates stretch from three months to 10 years. You can build a massive CD ladder with Discover, if you're so inclined. The minimum deposit for Discover® Bank CDs is $0.

Western Alliance Bank CDs offered through the Raisin platform are short and sweet. The range is small, only three months to one year, but each term offers an APY near or better than 5.00%. These are some of the highest rates out there, hands down. You can open these Western Alliance Bank CD through Raisin with as little as $1.

None of these banks charge you monthly fees. If your bank does, consider switching. Plenty of banks, including ones not listed here, will give you great rates for zero monthly fees.

The cost of not switching to a better CD

On paper, 3.50% is a small number. It's a sneaky little bugger, sure -- but it's one with massive leverage over your long-term savings. Assuming you stay invested, you could earn quite a bit of cash by switching to a CD with an APY 3.50% higher.

Here's a quick illustration of your potential earnings, assuming a $2,500 deposit:

For larger deposits, a higher rate has even more dramatic effects on your earnings. Here's a table illustrating what you'd earn with a hefty $10,000 deposit:

The more money you deposit and the longer the CD term, the more rates matter. Your money compounds. By not switching to a higher CD rate, you could be leaving thousands of dollars on the table.

When is switching CDs worth the hassle?

Even if your bank offers CDs with rates lower than ours, it might be worth staying. Managing more than one bank account takes time and effort. And if you withdraw money from a CD too early, you could lose some earnings to penalties. Early withdrawal penalties are no joke.

Consider switching to a better CD rate if locking in the best interest rate is a priority. For many, it is. CDs are popular right now for a reason, as rates are historically high. It may be the best time to lock them in before the Federal Reserve cuts rates -- and banks follow suit.