Best 5-Year CD Rates: Over 4% for July 2025
If you're looking for a low-risk way to grow your money, a certificate of deposit (CD) might be a good fit. Yields vary, but the best five-year CD rates exceed 4% in July 2025. That's much higher than the national average rate of 1.96%, according to Curinos data from that same time period.
Let's take a closer look at CD rate trends, how much you stand to earn and what it could mean for your money. You can then decide if a five-year CD makes the most sense for your finances.
5-Year CD Rate Trends
The average five-year CD rate hasn't changed much in recent months. As of July 2025, it came in at 1.96%. But it's important to remember that these numbers don't necessarily represent what you can actually earn with a CD. Some banks and credit unions currently offer rates that are well over 4%.
Average 5-Year CD
How Much Can You Earn With a 5-Year CD?
The size of your deposit and your annual percentage yield (APY) will ultimately determine how much interest you'll earn with a five-year CD. Below is a snapshot of what that could look like based on different rates and deposit amounts. For example, if you put $10,000 into a five-year CD with a competitive rate of 4.25%, you could earn $2,313 in interest.
| Initial Deposit Amount | Average Rate of 1.96%* | Competitive Rate of 4.25% |
|---|---|---|
| $1,000 | $102 | $231 |
| $10,000 | $1,019 | $2,313 |
| $100,000 | $10,192 | $23,135 |
*Source: Curinos LLC, July 2025
What Determines CD Rates?
General interest rate trends often influence how much you can earn with a CD. The federal funds rate, which is determined by the Federal Reserve, is a good starting point. Financial institutions refer to this target range when lending money between each other. It's continually in flux, and CD rates generally move in the same direction as the federal funds rate.
How to Find the Best 5-Year CD
CD rates and fees can vary greatly from one bank or credit union to the next. The following steps can help you find the best five-year CD:
- Consider different types of five-year CDs. CDs come in several shapes and sizes. For example, if you're making a large deposit (think $100,000 or more), opting for a jumbo CD could get you the best interest rate. You might also secure a stronger rate by purchasing a CD through a brokerage firm instead of a bank. Just know that all types of CDs have potential benefits and drawbacks.
- Shop around for the best CD. Every financial institution is different—and even those that offer similar interest rates can vary when it comes to fees and account requirements. For example, some may require an opening deposit of $10,000 or more. There might also be additional costs if you buy a brokered CD. The takeaway is to do your research and read the fine print before opening a CD.
Is Now a Good Time to Get a 5-Year CD?
A CD might be a good investment if the federal funds rate has ticked upward. When this rate goes up, you'll likely see APYs on CDs and savings accounts increase as well. Interest rates on loans and credit cards also tend to respond in a similar way.
It's impossible to know whether the federal funds rate will decrease in the near future. If it does, however, opening a five-year CD now might allow you to lock in the current rate. But again, there are no guarantees.
Whether now is the best time to open a five-year CD also depends on your financial situation. When you put money into a CD, you'll likely be charged an early withdrawal penalty if you tap those funds before the account matures. You'll want to be sure you're comfortable losing access to your money for five years—and that you have an emergency fund set aside in case you need quick cash.
Learn more: How to Calculate Your CD Returns
Pros and Cons of 5-Year CDs
This type of CD comes with unique pros and cons to consider. Understanding these finer points can help you decide if it's the right investment for you.
Pros
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You can expect to earn more than you would with a savings account. The average rate for a traditional savings account is generally sub-1%. High-yield savings accounts offer better rates, but they still tend to lag slightly behind CDs.
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It's a safe investment. Most CDs from banks and credit unions are insured for up to $250,000. What's more, rates on CDs are generally fixed. That means risk is low and your interest rate is guaranteed, unless you pull money out before the term ends.
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It can help prevent overspending. If your CD has an early withdrawal penalty, it could discourage you from pulling your money out on a whim. That little roadblock can help protect your investment and strengthen your finances over the long run.
Cons
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You might get a better rate with a shorter term. Because interest rate cuts could happen in the future, CDs with shorter terms may offer higher rates than five-year CDs. This isn't set in stone though, which is why it's important to compare different CD providers before opening an account.
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Early withdrawal penalties can eat into your savings. Unless you opt for a no-penalty CD, you could pay up to 180 days' worth of interest for withdrawing CD funds early. But the caveat of a no-penalty CD is that interest rates tend to be lower.
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Returns are still modest. Even with the best five-year CD rate, you might net better returns with higher-risk investments like exchange-traded funds or mutual funds. Historically, the average annual stock market return is about 10%.
Learn more: The Pros and Cons of Certificates of Deposit (CDs)
Alternatives to 5-Year CDs
A five-year CD isn't for everyone. If you're unsure, one of the following alternatives may be worth considering:
- High-yield savings account: This type of account offers higher-than-average APYs and easy access to your money. Some banks reserve their best rates for balances that are below a certain threshold, such as $5,000.
- Shorter-term CD: Putting your money into a one-year CD, for example, might get you a higher interest rate. You could also use a CD barbell approach, which involves dividing your deposit between one short-term CD and one long-term CD.
- Money market account: This option allows you to earn interest and enjoy easy withdrawals—most come with a checkbook or debit card. Money market account yields can be even higher than what you'd receive from a CD.
Frequently Asked Questions
The Bottom Line
A CD is a low-risk investment that could help diversify your portfolio and provide predictable returns. The national average rate for a five-year CD can vary, but it's possible to lock in an APY that's much higher than the national average. It highlights just how important it is to shop around and compare different banks and credit unions since rates and fees can vary greatly.
Grow your money safely with a CD
Lock in savings with a certificate of deposit—earn higher interest rates over a fixed term.
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About the author
Marianne Hayes
Marianne Hayes is a longtime freelance writer who's been covering personal finance for nearly a decade. She specializes in everything from debt management and budgeting to investing and saving. Marianne has written for CNBC, Redbook, Cosmopolitan, Good Housekeeping and more.
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