Two-year certificates of deposit (CDs) are an ideal savings option for folks who want to earn a little extra yield on money they won’t need for, well, 24 months. Since the Federal Reserve has significantly raised interest rates since the spring of 2022, you can earn much more than you could have just a few years ago.
Why trust us
To find the best options for you, we evaluated dozens of data points at more than 80 financial institutions, weighing available rates, customer satisfaction, minimum requirements and other considerations.
Annual percentage yields (APYs) and account details are accurate as of June 22, 2023.
Best 2-year CD rates July 2023
Compare the best two-year CDs
Methodology
APY: 60%
CDs are great to have because they earn a guaranteed yield. All other things equal, there’s little point in getting a two-year CD with a lower interest rate. We weighed APY the most heavily when evaluating CDs. Ones with higher rates ranked better.
Digital experience: 10%
In most cases, the main way in which you interact with the institution holding hundreds (potentially thousands) of your funds is through the app or the website. The digital experience matters. Glitchy interfaces and clunky navigation doesn’t exactly inspire trust. App ratings on both the Apple App Store and Google Play Store played a part in our analysis.
Compound interest schedule: 10%
While the monetary difference between daily and monthly compounding interest isn’t large for smaller amounts of money over shorter periods of time, it still makes a difference. And it can really show in large funds over longer periods. We ranked CDs with a shorter compounding interest schedule higher than other compounding schedules.
Minimum deposit requirement: 8%
The best APY in the world doesn’t matter a whole lot if you can’t meet the minimum deposit requirement. Because putting money away in a CD is typically lower on the financial to-do list for many Americans, if you do decide to stash some cash away, CD minimum requirements should be easily achievable.
Customer service: 8%
At one point you may need to contact the organization holding your money. Having multiple options to do so (phone, email, chat) and extended hours (ideally, 24/7) lets you choose how and when to communicate with the bank or credit union, so you don’t have to plan your day around making a phone call or a trip to a branch.
Available terms and availability: 4%
While a two-year CD may be ideal for your savings goals right now, when it matures, you may want to consider another CD option. Rather than open another account at another bank, it’d be more convenient to be able to get the CD term you want at the bank you’re already at. Institutions that had many CD terms available nationwide ranked higher.
Why some banks weren’t chosen
Most of the best two-year CD providers are online banks. You may notice the absence of some of the biggest names on the market like Bank of America, Wells Fargo and more. This is because many of the most popular financial institutions don’t feel the need to offer competitive deposit rates. They already have a ton of deposits. It’s the smaller institutions that typically want to make some noise and gain customers.
Choosing the best 2-year CD rate
All else being equal, it’s smart to take the highest CD rate. Most CD rates are given as an annual percentage yield (APY), which describes how much your deposit would earn each year.
As of June 2023, the average APY for a two-year CD stood at 1.45%, according to the Federal Deposit Insurance Corp. (FDIC). At the same time, some financial institutions were offering two-year CDs with APYs exceeding 5%.
“[It] can make a huge difference for your future bank balance,” said Ben McLaughlin, president of SaveBetter.
To find the best CD rate, you can start by looking at what your current bank offers.
“But don’t sell yourself short by ending the search there,” said McLaughlin. “Be sure to check online for other options, because your local bank may not have the best rates.”
Ken Tumin, senior industry analyst at the DepositAccounts, said credit unions and online banks tend to provide the best rates for two-year CDs.
Data from the National Credit Union Administration (NCUA) shows that the national average CD rates offered by credit unions in the first three months of 2023 were, on average, 0.49 percentage points higher than those offered by banks.
Besides looking at credit unions, “pay close attention to promotional interest rates,” said Michael Ashley Schulman, CFA and chief investment officer at El Segundo, a California-based capital advisor firm.
You may be able to score a great rate that’s only available for a short time from a smaller organization, which makes the offer to attract new customers.
Keep in mind, however, that, when the maturity date rolls around, there may not be another stellar promotional rate at the same organization and you may have to look around again.
How to open a 2-year CD
Opening a two-year CD is similar to opening a savings account. Here are the steps:
- Consider the type of CD you want. Several kinds of CDs are available, such as traditional CDs, which offer a fixed interest rate; jumbo CDs, which typically require a hefty deposit; a bump-up CD, which lets you switch to a higher APY if the rate changes before the maturity date; and a no-penalty CD, which allows you to withdraw your cash early without paying fees.
- Research the best rates. Use our list and look around at the banks you know to see the best yields on the market.
- Ensure the institution is federally insured. Your deposits can be protected up to $250,000 per bank, per account ownership type, if the institution is insured. You can look on the organization’s website or use the FDIC’s BankFind tool or the NCUA’s Research a Credit Union tool to find out.
- Set up the account. Depending on the financial institution, you may be able to open a CD online, via a mobile app, in person or by phone. However you do it, you’ll need to supply personal information such as name, address, date of birth and Social Security number. Credit unions have an additional step; to become a member, you typically must be (or become) affiliated by joining a consumer group or donating to a charity.
- Determine how often you’d like to receive interest payments. You may be able to get interest payments monthly, semiannually or annually. Or you could reinvest your interest payments.
- Put money into the CD. To fund the account, you must make an initial deposit through an online transfer, through an over-the-phone transfer, by check or with cash. Some financial institutions require a minimum dollar amount for the deposit, while others don’t.
While savers typically get CDs directly from banks or credit unions, brokerage firms and independent salespeople also offer CDs. Although you may be able to obtain a higher interest rate with “brokered CDs,” keep in mind that they don’t qualify for deposit insurance.
Are 2-year CD rates rising?
“In today’s higher interest rate environment, investing in CDs can be rewarding, especially in shorter durations like a two-year CD,” said Krisstin Petersmarck, investment advisor representative at Bridgeriver Advisors in Bloomfield Hills, Mich.
For now, interest rates for two-year CDs remain high. In fact, they could climb even more.
CD yields tend to follow, albeit at a lag, the path set by the Federal Reserve; if the Fed increases rates, CD rates typically increase, too. Right now that increase is at the shorter end, typically between six months and two years, because market participants believe that longer-term economic growth could slow, thereby causing the Fed to eventually cut rates.
Learn more: Read our 2023 CD rates forecast.
However, that’s still a ways off. The Fed is likely to raise interest rates throughout 2023 since unemployment remains low and inflation, especially when you strip out volatile food and energy prices (which is what the Fed takes most seriously), is much higher than desired.
Therefore, expect rates to crater only when the economy appears to be in trouble.
Using a 2-year CD in a CD ladder
A CD ladder lets you take advantage of several CDs with a variety of maturity dates in hopes of maximizing yields. The ladder might include a blend of short-term and long-term CDs with different APYs. When a CD reaches the maturity date, you can withdraw your money or roll it over into a new CD.
If you’re building a CD ladder, you need to figure out how much money to put into the CDs and how many CDs to use as rungs in the ladder.
Imagine you have $1,500 to put to use. In a laddering strategy you could put $500 in a one-year CD, $500 in a two-year CD and $500 in a three-year CD.
When the one-year CD matures, you then purchase another three-year CD. This way, you have access to a third of your funds every year.
The benefit of the strategy is that you are taking advantage of rising interest rates now. In the event that interest fall, at least you have exposure to longer-term CDs paying at a higher rate than you hypothetically would be able to find on the market.
“With the ladder strategy, savers take advantage of rising interest rates without having their hard-earned money languishing in a checking account, earning no interest and even losing value over time,” McLaughlin said.
Other CD terms to consider
A “term” is the fixed amount of time you’ll earn a fixed interest rate on the money held in a CD. A two-year CD isn’t your only option, of course. You can choose from a wild variety of terms. Some popular CD terms you might consider include:
Most short-term CDs range from three months to one year, while most long-term CDs are in the two-year to five-year bucket.
Among the factors to weigh when deciding on a CD term are:
- How long are you willing to lock up your money? Are you more comfortable keeping your money in a two-year CD rather than a five-year CD? You should maintain an emergency fund that you can access at any time without penalty, in addition to any CDs.
- What are your savings goals? When will you likely need the cash for a vacation or a down payment on a house or car?
- What do your investments look like? Deposits can be considered an extremely conservative investment, one to balance out riskier stock market choices. How far out are you willing to plan and how long do you want to have such a safe (low-yield) asset?
- How do different terms fit into a CD ladder strategy? If you’re building a CD ladder, how often do you want some of your funds to be available? For example, if one-year increments are good, you could sandwich a two-year CD with a one-year and three-year deposit.
The Office of the Comptroller of the Currency points out that once a CD matures, you might be given a grace period to decide whether to renew it, roll over the money to another CD or withdraw your money. Keep in mind that a financial institution isn’t necessarily obligated to keep paying interest on your CD after it matures.
Frequently asked questions (FAQs)
Some two-year CDs offer an APY of more than 5.00%, though the average is considerably lower. As such, the rate for a two-year CD might be higher or lower than the rate for other kinds of savings accounts.
A money market account gives you easier access to cash than a two-year CD does. On average, though, a two-year CD pays a higher interest rate than a money market account does.
A two-year CD is best for someone who’d like to earn interest on their money (perhaps at a higher rate than a shorter-term CD), but doesn’t anticipate needing quick access to the money when a financial emergency arises.
