Best 3-Year CDs July 2024

Want to grow your savings while taking on almost no risk? By taking advantage of the generous APYs offered on the best CD accounts, you can do just that. And now is the time to do it, as some of the best rate are likely to disappear once the Federal Reserve starts cutting interest rates later this year.

CD rates have risen substantially since 2023, following the Federal Reserve’s effort to lower inflation through several interest rate hikes. As interest rates rose, many banks began offering even more competitive yields on savings accounts. However, now that the Fed's rate hiking campaign is over, the boon to CD rates is coming to an end.

The Federal Reserve held interest rates steady for the seventh consecutive time at the most recent policy-setting meeting in June. This pause in rate hikes means the federal funds rate, a key overnight lending rate that impacts all kinds of rates and loans, will remain at a target range of 5.25% to 5.5%, the highest it’s been in 23 years. Previously, the Federal Reserve predicted three interest rate cuts in 2024, but now estimates are for just one quarter-point cut for the year.

Since the Federal Reserve decided to hold interest rates steady, savings rates have started to fall. And when the Federal Reserve cuts interest rates later this year, as expected, savings rates will likely drop even further. Therefore, it is a good idea to take advantage of savings rates while they remain high.

Currently, many of the top-yielding accounts for 1-year CDs, 3-year CDs and 5-year CDs have rates well over 4%. So, if you’re saving for an upcoming purchase, or just looking for a fixed and safe return on your cash, opening a 3-year CD account could be a smart option. Just make sure you won’t need access to your money before the CD's maturity date.  

Best 3-year CD accounts 

Try our tool, in partnership with Bankrate, that allows you to shop around for CD rates available today.

Transportation Federal Credit Union

APY: 5.00%

Minimum Balance: $1,000

DollarSavingsDirect

APY: 5.00%

Minimum Balance: $1,000

Hughes Federal Credit Union

APY: 4.86%

Minimum Balance: $1,000

Dow Credit Union

APY: 4.81%

Minimum Balance: $500

Crescent Bank

APY: 4.80%

Minimum Balance: $1,000

Workers Credit Union

APY: 4.75%

Minimum Balance: $500

MYSB Direct

APY: 4.70%

Minimum Balance: $500

Luana Savings Bank

APY: 4.65%

Minimum Balance: $2,000

Credit Human

APY: 4.65%

Minimum Balance: $500

First Internet Bank

APY: 4.61%

Minimum Balance: $1,000

Seattle Bank

APY: 4.65%

Minimum Balance: $1,000

What is a CD account?

With a CD account, your cash is locked away for a fixed period of time of typically 1-5 years, unless you’re prepared to pay a fee to take it out early. 

Because of those early-withdrawal fees, CDs aren’t a good place to park cash you plan on spending in the coming months, nor do they make good emergency funds. They are good options, however, if you’re trying to save for a future purchase or event and want to grow your cash without accessing it. 

You’re guaranteed a fixed return on your cash, so the rate won’t go up or down based on market conditions, which is both a good thing as you get certainty, but also a possible problem, in case rates elsewhere shoot up and you don’t benefit. 

Like other savings accounts, they are a good option for those who value risk-free returns as you aren’t riding the waves of the stock market. In addition, most CD accounts are FDIC or NCUA insured, depending on whether they’re opened through a bank or credit union, so your cash is safe even if your bank or credit union closes. FDIC insurance protects up to $250,000 per account ($250,000 per person in a joint account), while NCUA insurance protects up to $250,000 per credit union member. 

Pros

• CDs offer guaranteed returns on deposits
• Fixed rates on CDs mean that even if rates fall, the APY on your account will remain consistent
• Most CD accounts from banks and credit unions are federally insured for up to $250,000
• Since you can only withdraw funds when your CD account matures, you won't be tempted to spend your money elsewhere

Cons

• No liquidity; Accessing funds from a CD account isn't as easy as with a savings account. And if you need to withdraw funds from a CD account before the maturity date, you'll be charged a fee, which will likely offset any interest earned
• Money cannot be added to a CD once it has been opened
• CDs have a lower earnings potential compared to stocks or mutual funds
• Fixed rates on CDs also mean that if rates increase, you'll miss out on potential earnings
• Rates may not be high enough to outpace inflation

1-year vs 3-year vs 5-year CD accounts 

Given your money is essentially locked away (unless you pay fees to get it out early), you need to carefully consider the amount of time you want to tie your cash up between the various types of CD options. 

For example, if you plan on purchasing a vehicle in around 3 years, opting for a 3-year CD can help you bolster your savings for when the time comes. It’s a “set it and forget it” type of investment. Your cash will grow thanks to compound interest with little effort on your part. 

In that scenario, a 5-year CD account is risky as you may need to pay a fee to get your money out after, say, three years.

Bottom line

At the last meeting, the Federal Reserve left interest rates unchanged but penciled in one quarter-point cut for 2024. Typically, when the federal funds rate falls, so do savings rates. For this reason, it's a good time to lock in CD rates while they still remain high. Before doing so, however, make sure to choose an account with a maturity date suited to your financial needs. 

If you're considering opening a 3-year CD to save for a future purchase or event, you can use our savings calculator to determine just how much your money will grow over time, depending on the APY of the account and the size of the deposit made.

Related Content

• Best 1-Year CD Rates
• Best 5-Year CD Rates
•  Best No-Penalty CD Rates