[ad_1]
You can find some of the best rates on certificates of deposit (CDs) in one of the first states that joined the Union. Residents of the Constitution State can get a plum yield on various CD terms, helping you to achieve your financial goals.
Why you can trust Money Blueprint
Our expert team analyzes thousands of data points on hundreds of banking products to help you find the best solution for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
Account details and annual percentage yields (APYs) are accurate as of October 24, 2023.
- 350+ CDs at 136 financial institutions reviewed.
- 50+ data points per CD analyzed.
- 4 levels of fact checking.
Compare the best Connecticut CDs
Methodology
We looked at scores of CDs and found the best rates, so you don’t have to. To be specific, we evaluated more than 350 CDs offered by 136 financial institutions — a mix of traditional brick-and-mortar banks, online banks and credit unions — and weighed them on the following factors to create a score out of 100.
- APY: 52%. The main point of having a CD is to earn guaranteed interest on it, so we weighed APY most heavily.
- Customer experience: 10%. While earning a high yield is vital, having a good experience with the bank or credit union that’s potentially managing thousands of your hard-earned dollars can help put your mind at ease. We considered ratings from the Better Business Bureau, Trustpilot and J.D. Power.
- Available terms: 10%. Options are always nice. Plus, having CD accounts spread out at multiple financial institutions can be hard to track. For savers who want to keep their CDs under one roof, we rewarded institutions that have more term options with a slightly higher score.
- Availability: 10%. The more widely available a CD is across the state and the nation, the better. Institutions also earned more points here if they had branch availability.
- Customer experience: 10%. We looked at customer reviews and ratings from the Better Business Bureau (BBB), J.D. Power and Trustpilot, plus we considered whether live chat support was available.
- Compound interest schedule: 8%. The more often your CD compounds, the more interest it earns. While the difference between a daily and a monthly compounding interest schedule is small for low amounts over short periods, it can grow exponentially.
- Digital experience: 5%. Many, if not most people buying CDs do so online. We took the ratings and reviews of the iOs and Android mobile apps into account.
- Minimum deposit: 5%. We believe in democratizing finance, which is to say, there’s little point in learning about savings products if they’re unaffordable. The lower the minimum required deposit, the better an institution scored here.
Based on the score, we formed a star rating for each institution. For instance, a bank with a score of 100 would earn five stars; one with a score of 80 earned four stars and so on. Institutions with high scores rose to the top.
Why some banks didn’t make the cut
You’ll notice that some of the largest banks in the nation are conspicuous by their absence on our list.
The largest banks — such as Bank of America, JPMorgan Chase and Wells Fargo — rarely offer competitive CD rates. As they’re already banking powerhouses and top-of-mind for many Americans, they don’t need to offer great yields to attract deposits.
Smaller institutions, on the other hand, tend to offer competitive yields to draw in customers and money.
How to find the best CD rates for you
You have quite a few options when it comes to finding the best CDs: Banks, credit unions and brokers offer a variety of rates, terms and allowed deposit amounts.
Shop around
Don’t settle for the first CD you come across: A little research can go a long way.
“When dealing with online banks or, in many cases, credit unions, you can expect to find higher CD rates compared to what big national banks offer”, said Dr. Ohan Kayikchyan, a certified financial planner (CFP) and founder of Ohan The Money Doctor.
Smaller institutions tend to offer the most competitive rates in a bid to steer customers towards them and away from the biggest, most-well known banks, which often don’t feel the need to offer great deals.
Jason Sohnen, a certified financial planner and director at OneEleven Financial Wellness agreed with Kayikchyan when it comes to shopping around.
“Just make sure whichever institution you select has your deposits insured by the FDIC or the National Credit Union Administration”, Sohnen said.
The Federal Deposit Insurance Corp. (FDIC) guarantees deposits up to $250,000 per depositor, per insured bank, per account ownership type. The National Credit Union Administration (NCUA) does the same at credit unions.
Go for a high yield
Common sense says: The higher the yield rate, the more money you’ll earn.
When you’re researching CD options, though, don’t just look at the interest rate. You also need to consider the annual percentage yield (APY), which reflects how often the interest rate compounds.
“The more frequently interest compounds, the more interest you’ll earn over time”, Sohnen said.
For example, you’d earn about $50 less if your 4% interest rate compounded annually rather than monthly on a deposit of $10,000 over five years. On a deposit of $100,000 at 5%, the difference would be more than $700.
You can use our CD calculator to see how different APYs affect your earnings.
Choose the right term
Take some time to carefully consider how long you can afford to set aside your savings. You can find CD terms on the shorter side, such as three months, or ones that last a decade, ten years.
You only want to pick a term you’re confident you can commit to — CDs usually have an early withdrawal penalty. Accessing your funds prior to the maturity date can cost a boat load. In some cases, if the CD hasn’t earned enough interest to cover the fee, it can bite into your CD’s principal.
There are no-penalty CDs available. They tend to have lower rates in exchange for allowing you to cash out fee-free anytime before the maturity date.
Set up a CD ladder
Traditionally, “the longer the term, the higher the interest you receive on your deposit”, Sohnen said.
Currently, that’s not the case, however. With the Federal Reserve fighting inflation, CD yields are up across the board, but the highest CD yields available in today’s topsy-turvy market are on terms of a year or less.
But it can be hard to know when rates have peaked — when you want to lock in a longer term. So, consider a CD ladder.
A CD ladder involves investing in multiple CDs with different maturities. For instance, you can open six-month, one-year, two-year and three-year CDs and distribute your funds among them.
“This approach allows you to take advantage of competitive interest rates on CDs with different maturities, ensuring that your funds will be available for withdrawal at various points in the future”, Kayikchyan said.
Generally, when a rung in the CD ladder matures, you reinvest the funds into a longer-term CD, so that you eventually have several long-term CDs with high rates maturing on a rotating basis, but you can adjust the strategy as necessary.
Still, it’s smart to keep your emergency savings in a high-yield savings account instead of a CD.
“You are able to access the funds the moment you need them with no penalty”, said Sohnen.
Currently, USAlliance Financial has the highest CD rates available, with a 5.75% APY on a six-month CD.
According to FDIC data, the national average rates (as of October 16, 2023) are as follows: 1.39% APY for a six-month CD; 1.79% APY for a 12-month CD; 1.50% APY for a 24-month CD and 1.38% APY for a 60-month CD.
You can find CD rates in Connecticut that are larger than the national averages by a sizable margin.
[ad_2]