Guide to Getting the Best Chicago CD Rates
Determining the best Chicago CD rates is about more than strictly looking at the numbers. There are a variety of different types of certificate of deposit accounts, and understanding what type of CD will best fulfill your financial goals is necessary is getting the best possible rate. Let’s examine the relationship between CD term length and interest rates so you can better understand what you’re looking for.
How CDs Are Different from Savings Accounts
Most people choose to invest in a certificate of deposit over a savings account because it offers higher interest rates, but why is this so?
Unlike a savings account, which allows the account holder to deposit and withdraw money on a regular basis, the funds in a CD are off limits until it matures. That’s because financial institutions use the money in deposit accounts to fund loans, so when you keep money in the bank, it allows them to lend more. Banks and credit unions can’t rely heavily on the funds in savings accounts as a source of lending because transactions occur so frequently–CDs, on the other hand, provide guaranteed cash for the entire term.
Financial institutions want to encourage you to keep your money on deposit, which is why they offer better rates on CDs. Since you can’t touch your money for a set period of time, you’re rewarded with a high interest rate. However, the term of your CD will determine how high that rate goes.
6-Month CD Rates
Though you can find CDs in Chicago with a term length of even less than six months, this is the most common type of short-term CD. 6-month CDs are especially attractive to those who want to earn the higher rates that CDs offer but don’t want to lose access to their money for too long. Six months is just long enough to keep funds on deposit to earn interest that beats a traditional savings account.
Below are the financial institutions in Chicago with the best 6-month CD rates today:
- International Bank of Chicago: 0.75%
- United Central Bank: 0.75%
- Beal Bank: 0.61%
12-Month CD Rates
As mentioned, banks and credit unions want you to keep your money on deposit as long as possible, so extending your CD term length will result in a higher interest rate (usually). If you can afford to lose access to a portion of your savings for a year in order to earn more interest, it’s well worth it. You can get the highest Chicago CD rates for a 12-month term here:
- Loyola University Employees Credit Union: 1.05%
- International Bank of Chicago: 1%
- United Central Bank: 0.95%
24-Month CD Rates
If you’re really ambitious and want to get the highest CD rates possible, you can obtain a certificate of deposit that lasts two years or even longer. This is the best strategy for earning the most interest, but it’s not realistic for everyone to deposit money for this length of time. If you are capable, however, these Chicago banks and credit unions have the best 24-month CD rates today:
- First Eagle Federal Credit Union: 1.26%
- United Central Bank: 1.1%
- Mutual Federal Savings and Loan Association of Chicago: 1.1%
As you can see, getting the best CD rate really comes down to obtaining a rate that’s competitive for the term length you want. Earning the top rate isn’t worth it if you deposit cash you really need for day-to-day expenses. When researching rates, it helps to know exactly what type of account you need first, and then narrow in on the top rates.
