Most CD accounts run from three months to five years, though you can find terms as short as one month or as long as ten years at certain banks. The most popular options cluster around six common lengths: three months, six months, one year, two years, three years, and five years.
Standard CD Term Lengths
Banks and credit unions build their CD menus around six core terms: three months, six months, one year, two years, three years, and five years. If you walk into any major bank or browse an online bank’s CD offerings, you’ll almost certainly see most or all of these on the list. A one-year CD is the most commonly discussed and frequently opened term, sitting right in the middle as a balance between earning a competitive rate and not locking your money away for too long.
Beyond these standard options, many banks also offer odd-length CDs with terms like five months, 13 months, 17 months, or 21 months. These non-standard terms sometimes carry the highest rates at a given institution, so it’s worth checking the full menu rather than assuming a round number is your best bet.
Short-Term CDs: Three to Eleven Months
Short-term CDs generally cover anything under one year. A three-month or six-month CD keeps your money accessible relatively soon while paying more than a standard savings account in most rate environments. These work well when you know you’ll need the cash within a year, such as saving for a tax payment, a tuition bill, or a planned purchase.
The tradeoff is straightforward: shorter terms usually pay lower rates than longer ones. When the rate difference between a six-month CD and a two-year CD is small, locking in the longer term often makes more sense. But when rates are falling, short-term CDs let you access your money sooner and reassess your options.
Medium-Term CDs: One to Three Years
One-year, two-year, and three-year CDs hit the sweet spot for many savers. They typically offer noticeably better rates than short-term CDs, and the commitment is manageable enough that most people can plan around it. A one-year CD, for example, matures quickly enough that you’re not guessing where interest rates will be half a decade from now.
Two- and three-year CDs make sense when you’re fairly confident you won’t need the funds during that window. If you’re building an emergency fund, these probably aren’t the right tool since you’d face penalties for pulling money out early. But if you have savings beyond your emergency cushion and want a guaranteed return, a medium-term CD locks in your rate regardless of what the broader market does.
Long-Term CDs: Five to Ten Years
Five-year CDs are widely available at nearly every bank. Terms beyond five years are harder to find. A handful of institutions offer CDs stretching to six, seven, or even ten years. First National Bank of America, for instance, offers terms all the way up to ten years. Marcus by Goldman Sachs goes up to six years. But most banks cap their longest CD at five years.
Long-term CDs can lock in a high rate during periods when rates are attractive, protecting you if rates drop over the next several years. The risk is the opposite scenario: if rates rise after you’ve committed, your money is stuck earning less than what’s newly available. You also lose access to that cash for a long stretch, which makes these CDs best suited for money you’re genuinely setting aside with no plans to touch.
What Happens When a CD Matures
When your CD reaches the end of its term, the bank gives you a grace period to decide what to do with your money. During this window, you can withdraw the full balance, roll it into a new CD, or move the funds to another account. Grace periods vary by bank but are commonly around seven to ten days. If you don’t act within the grace period, most banks automatically renew your CD into a new term of the same length at whatever rate they’re currently offering, which may be higher or lower than the rate you originally locked in.
Mark your maturity date on a calendar. An automatic renewal can trap your money for another full term at a rate you didn’t choose. Most banks send a notice as maturity approaches, but it’s easy to miss an email or letter.
Early Withdrawal Penalties
Pulling money out of a CD before it matures triggers an early withdrawal penalty at nearly every bank. The penalty is calculated as a set number of days’ or months’ worth of interest, and it scales with the CD’s term. A six-month CD might carry a penalty of 90 days’ interest, while a five-year CD could cost you 150 days’ interest or more. The exact formula varies by institution, and the penalty is based on simple interest rather than compounded interest.
In some cases, the penalty can eat into your original deposit if you haven’t earned enough interest to cover it. Most banks also don’t allow partial withdrawals from CDs, so you’d need to close the entire account to access any of the funds. Before opening a CD, check the bank’s penalty schedule for the specific term you’re considering.
No-Penalty CDs
If locking up your money makes you uneasy, no-penalty CDs offer a middle ground. These let you withdraw your full balance without any fee starting on the seventh day after you deposit the funds. The terms on no-penalty CDs tend to be shorter, often ranging from seven months to about 13 months.
The catch is that no-penalty CDs typically pay slightly lower rates than traditional CDs of the same length. You’re trading a bit of yield for the flexibility to pull your money if you need it or if a better rate becomes available elsewhere. They function almost like a savings account with a locked-in rate, which can be useful when you think rates are about to drop and want to secure today’s rate without a firm commitment.
Choosing the Right Term
The best CD term depends on when you’ll need the money and what you think interest rates will do. If you have a specific goal with a known timeline, match the CD term to that date. Saving for a down payment you’ll need in two years? A two-year CD fits naturally.
If you’re less certain about timing, a CD ladder can help. This strategy splits your savings across multiple CDs with staggered maturity dates. For example, you might put equal amounts into a one-year, two-year, three-year, four-year, and five-year CD. As each one matures, you either use the cash or reinvest it into a new five-year CD. This gives you regular access to a portion of your money while still capturing the higher rates that longer terms offer.
For most people, the one- to three-year range provides the best combination of competitive rates and reasonable flexibility. Anything beyond five years only makes sense if you’re confident rates will decline and you truly won’t need the funds during that period.