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California residents looking to grow their savings will find a suitable option in certificates of deposit (CDs), which are offering stellar yields. These deposit accounts are relatively low risk as they are insured by the Federal Deposit Insurance Corp. (FDIC) and guarantee a return during the duration of the CD's term. Here's how to find the best CDs in California.
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The following accounts can be found at most banks and credit unions. They’re federally insured for up to $250,000 and offer a safe place to put your money while earning interest.
Certificate of Deposit (CD)CDs are best for individuals looking for a guaranteed rate of return that’s typically higher than a savings account. In exchange for a higher rate, funds are tied up for a set period of time and early withdrawal penalties may apply.
Checking accountChecking accounts are best for individuals who want to keep their money safe while still having easy, day-to-day access to their funds. ATM and other transactional fees may apply.
Savings / Money Market Accounts (MMA)Savings and MMAs are good options for individuals looking to save for shorter-term goals. They’re a safe way to separate your savings from everyday cash, but may require larger minimum balances and have transfer limitations.
Deposit amount Current 1 year CD trends Bankrate Partner average National averageThe "Bankrate Partner average" is calculated from the average of the top savings account offers from the institutions we track, included on this page as of 9/4/2024. "National average" is determined by Bankrate's comprehensive national survey of savings accounts and CDs.
No penalty CD rates
Min. term length Max. term lengthThere are three main components you should consider when choosing a CD: the term length, the yield and the penalty for early withdrawal.
A CD term is the length of time your money is slated to stay within the account. Terms typically range anywhere from three months to five years, though some banks offer terms as short as one week to as long as a decade, even longer. To find the right term for you, consider how long you can park your cash in the account without needing to withdraw it. Unless you're opening a no-penalty CD , you'll likely need to pay a penalty for withdrawing your money before the CD's maturity date.
You'll also want to consider the minimum opening deposit when choosing your term. While some banks don't have a minimum deposit requirement, others may ask for a relatively standard $500 or $1,000 minimum deposit. If you're interested in a jumbo CD , you'll likely need around $100,000 to open an account.
Getting the best yield is probably the most important factor for most consumers when choosing a CD. Thanks to historic interest rate hikes by the U.S. Federal Reserve, yields on CD rates have soared over the last three years. Top-notch rates for CDs surpass 5 percent APY in today's market, but not all institutions are offering yields that high. In general, big institutions such as Bank of America and Chase Bank are still offering lackluster rates compared with online-only banks like Ally Bank and Marcus by Goldman Sachs .
But choosing a CD based solely on the highest yield may not always be the right move. If you suspect you may need to withdraw your money before a CD matures, you'll likely need to pay an early withdrawal penalty, which could eat at some of your principal (the money you originally invest with in a CD).
Banks typically impose an early withdrawal penalty if you withdraw some or all of the principal before a CD matures. Early withdrawal penalties range widely from bank to bank. A relatively standard early withdrawal penalty for a 12-month CD could range anywhere from three to six months of interest. And some banks may even impose a flat fee on top of that penalty, further ratcheting up the cost of withdrawing from a CD before maturity.
Here, you'll want to consider your risk tolerance, balancing the term and the yield with the associated penalty. If you're more likely than not to withdraw early, you may want to consider a CD with a lower yield but a softer penalty.
Whether to invest in a short-term or long-term CD is dependent on your financial situation.
