- Tania Brown, CFP® professional, vice president of coaching strategy at OfColor
- Roger Ma, CFP® professionaland author of"Work Your Money, Not Your Life"
- Sophia Acevedo, banking editor, Business Insider
- Mykail James, MBA, CFEI, BoujieBudgets.com
Here's what they had to say about CDs.
How do you decide how long your CD term should be?
CDs come in different terms that range from months to years, and a 5-year CD is typically one of the longest terms available. When choosing the right term for you, start with how you're going to use the money, and when. If you're buying a house in five years and know you won't need the money until then, a 5-year CD might work for your needs — however, if you're buying that house in two years, you'll need to choose a shorter term.
Once you know when you'll need the money, you can take a look at available rates. Maybe you have some flexibility around when you'll need the money, and find it worth leaving in the bank an extra six months or year to get a higher rate.
Should you put money in a high-yield savings account, money market account, or CD?
You're allowed to have multiple types of accounts, and it's OK to put money in different places for different purposes. Perhaps you want a high interest rate on money you can access at any time for an emergency, so you put that emergency fund in a high-yield savings account. Then, you want a savings account from which you can make regular withdrawals, so you use a money market account. Finally, you want to keep a nest egg out of sight and out of mind while earning a strong interest rate, so you use a CD.
Choosing which type of account to use comes down to how you plan to use that money, and when.
Our Methodology: How We Chose the Best 5-Year CDs
Business Insider's personal finance team researched over 60 banks and credit unions to find the best 5-year CD rates.
We are editorially independent, meaning that the business team does not dictate what we cover or write about.To understand how we cover and rate products, you can learn more about oureditorial standards.
For all of our banking products, we follow our bank rating methodology when assigning a score. For CDs, we start by rating a CD and the bank's minimum opening deposit, customer support, mobile app ratings, ethics, security, interest rate, early withdrawal penalties, miscellaneous features, and available terms from zero to five. Once each category has been rated, we calculate a weighted average to get the CD's final rating.
CD ratings can be anywhere from one star to five stars. A one-star rating is the lowest score and lets you know the product needs significant improvement. A five-star rating is the highest rating possible. It shows that a product is a top-tier option for most people.