It is typical for CDs to offer a higher yield for a longer term. The farther out the term goes, the less the bank is willing to boost the yield.
Using RateCatcher’s CD rate comparison tool, I calculated the ratio of yield to term for the most common CD terms.
The longest term CDs provided the worst ratios with the best 7 year CD coming in at 0.49.
The sweet spot is at the 1 year and 2 year CDs with ratios of 1.48 and 1.13 respectively. The 6 month CD is somewhat irrelevant because the current best money market account offers a better yield of 1.30% APY without any withdrawal restrictions.
You’ll notice the 2 year CD APY is the same as the 3 year CD APY. This is because iGObanking is offering a very competitive 2 year CD right now. ln fact the next best 2 year CD is only offering 1.79% APY from Bank of Internet.
Below is the chart of Yield/Term Ratios.
Yield/Term Ratios for the Best CD Rates:
|CD Term||Yield/Term Ratio||Yield||Bank/Credit Union|
|6 Month CD||1.15||1.15% APY||Bank of Internet|
|1 Year CD||1.48||1.48% APY||Bank of Internet|
|2 Year CD||1.13||2.25% APY||iGObanking.com|
|3 Year CD||0.75||2.25% APY||iGObanking.com|
|5 year CD||0.53||2.65% APY||First Internet Bank of Indiana|
|7 Year CD||0.49||3.49% APY||PenFed Credit Union|