The Best 2-Year CD Rates for 2024

Explore the most current rates for 2-year CDs. Learn about pros, cons, and smart financial strategies. Make informed decisions for a balanced approach to stability and growth.
Written by Anna Baluch
Financial Expert
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If you’d like to save some money for a short-term goal, a 2-year certificate of deposit (CD) might make sense. It can help protect your savings while earning a predictable, guaranteed return. Let’s look at what 2-year CDs are, how they work, and where you can find them.

What Is a 2-Year CD?

A 2-year CD is a bank deposit product that will hold your funds for two years. Compared to traditional savings accounts and money market accounts, 2-year CDs usually earn higher interest rates. However, they’re less liquid. A 2-year CD might be a good option if you’d like to save for a purchase in the foreseeable future.

How Does It Work?

You can open a 2-year CD at a bank or credit union. If you commit to keeping your money in an account for 2-years, your savings will grow via a fixed interest rate. Once the 2-year term is up or your CD matures, you can withdraw the money you deposited plus any interest your account accrued. If you need to access your money before the 2-year term ends, you’ll likely have to pay an early withdrawal penalty, affecting your interest earnings.

Which Banks Have the Best CD Rates?

Hundreds of banks offer CDs, and there’s fierce competition among them to offer the best rates. We’ve compiled a list of some of the best CD accounts to help you find the ones that best fit your financial goals.

The Best 2-Year CDs

There are several places you can turn to for a 2-year CD. Here are several good options to consider:

Capital One

With a Capital One 360 account, you’ll find traditional CDs and IRA CDs, which offer special tax perks. You don’t have to meet a minimum balance requirement, no matter which CD product you choose. You can open a Capital One CD with as much or as little money as you want.

Synchrony

Synchrony‘s bump-up CDs allow you to ask for a rate increase if the rate goes up from when you initially opened your account. Synchrony’s bump-up CDs have no minimum balance requirements, and you can make additional deposits during the 10-year grace period after your CD matures.

Bread

With Bread Savings CDs, you can renew your account automatically when it matures. Another option is to cash it out within 10 days to avoid a penalty. CDs from Bread Savings require a minimum of $1,500.

Forbright

If you want to open a CD from a bank that focuses on sustainability, Forthbright might be a good choice. You can enjoy great interest rates and no monthly fees, but you’ll need at least $1,000 to start.

Prime Alliance Bank

Prime Alliance Bank CDs come with a personalized customer service experience from friendly, knowledgeable banking professionals. You can open a CD account online for $500.

Pros and Cons of a 2-Year CD

Before you go ahead and commit to a 2-year CD, keep these benefits and drawbacks in mind.

Pros

  • Guaranteed returns: Since CDs have a fixed rate return, you’ll know exactly how much you’ll earn in interest after the two years are up. You don’t have to worry about economic conditions.
  • Great rates: Most 2-year CDs offer higher interest rates than traditional savings and money market accounts. They may not be as high as long-term CDs, but they’re usually still competitive.
  • Low risk: 2-year CDs are considered low-risk investments. They’re federally protected up to $250,000 per account if you choose an FDIC-insured bank or NCUA-insured credit union.
  • Faster access: You won’t have to wait too long to withdraw your money like you would with a longer-term CD. You can collect your funds plus interest earnings in just two years.

Cons

  • Lower rates than long-term CDs: You can expect to earn less interest with a 2-year CD than with a 5-year or longer-term CD, for example. The good news is you can shop around and still secure a good rate on a 2-year CD.
  • Early withdrawal penalties: If you withdraw money before the two-year term ends, you’ll be charged an early withdrawal penalty. This penalty can interfere with your savings goals.
  • Limited returns: While 2-year CDs are predictable, their returns are limited. If you have a higher risk tolerance, you may maximize your returns by investing in stocks, bonds, and mutual funds.
  • Risk of inflation: The inflation rate may be higher than the rate you lock in on your 2-year CD. Therefore, the value of your funds may go down over time.

Who Are 2-Year CDs Best For?

If you’d like to save some money but access it sooner rather than later, a 2-year CD might be a solid option. You won’t have to tie up your money for many years and can pull out your deposit and interest earnings in a relatively short period. A 2-year CD can help you save for a short-term goal, like a wedding, vacation, or furniture.

When Is a CD the Right Choice?

A CD is ideal if you like the idea of guaranteed returns and don’t want to risk significant losses by investing in the stock market. This is particularly true if you can land a competitive interest rate and feel confident you won’t need the funds before the CD matures. It can also be worthwhile if you want to earn more than you would in a traditional savings account or money market account.

How Much Interest Can You Earn on a 2-year CD?

Your interest earnings on a 2-year CD will be based on your deposit amount and the interest rate you secure. Once you know this information, you can calculate your returns.

If you’re considering a 2-year CD to boost your savings, exploring additional factors that can optimize your financial strategy is essential. Diversifying your investment portfolio is crucial for long-term financial success. While 2-year CDs offer security and predictability, consider allocating some of your funds to more dynamic investment options like stocks, bonds, or mutual funds. These assets may present higher returns over an extended period, although they come with increased risk.

Moreover, keep an eye on inflation rates. Inflation can erode the actual value of your money over time, potentially affecting the purchasing power of your savings. While 2-year CDs provide stability, assessing whether the interest rate compensates for potential inflationary effects is wise.

Additionally, explore local credit unions or community banks when searching for 2-year CDs. These institutions may offer competitive rates and personalized services, enhancing your banking experience.

As you navigate the world of CDs, consider ladder strategies. Instead of putting all your funds into a single 2-year CD, distribute them across multiple CDs with varying maturity dates. This approach allows periodic access to your funds while taking advantage of potentially rising interest rates.

Bottom Line

While a 2-year CD provides a reliable savings option, a well-rounded financial approach involves diversification, awareness of inflation, and strategic banking choices to maximize your returns and meet your specific financial goals.

Frequently Asked Questions

What are the benefits of a 2-year CD?

A 2-year CD can be a risk-free way to save for a short-term goal, like a vacation or new furniture. You may be able to earn more in interest than you would with other savings products, like traditional savings accounts and money market accounts.

What is the best 2-year CD?

The best 2-year CD depends on your unique situation and preferences. Capital One, Synchrony, Bread, Forebright, and Prime Alliance Bank are good options you might want to explore.

How much interest can I earn on a 2-year CD?

Your interest earnings on a 2-year CD will be based on your deposit amount and the interest rate you secure. Once you know this information, you can calculate your returns.

About Author
Anna Baluch
Anna Baluch is a personal finance writer and expert who writes about financial topics ranging from personal and student loans to mortgages, debt relief, auto financing, and budgeting. As a contributor to MoneyRates, Anna’s insights are backed by her hands-on experience, exemplified by her achievement of paying off her mortgage in just 16 months, a journey she shared on the “Burn Your Mortgage” podcast in 2019. Her knowledge and expertise have appeared on personal finance platforms such as LendingTree, Business Insider, Credit Karma, Experian, American Express, Rocket Mortgage, U.S. News & World Report, and Policygenius. Anna is dedicated to guiding consumers toward making informed financial choices.