The Best 18-Month CDs for January 2025
Do you want to invest your money in a savings vehicle with a fixed interest rate? Most high-yield savings accounts offer a variable rate, meaning the rate can change at any time.
The Fed is expected to lower interest rates again. Act now to secure an 18-month CD at today’s high rates before they drop, and lock in a higher rate.
You might sign up for a savings account at a highly competitive rate, only to see that rate fall a month later.
That’s where CDs come in.
What Is an 18-Month CD?
A certificate of deposit is a type of savings and investment option banks offer. Credit unions call the CD a “share certificate,” which essentially works the same way.
CDs are available in various terms, usually from six months to five years. The term is the period during which you agree to leave your money in the CD.
When you open the CD, you do so at a specific and guaranteed interest rate.
If you leave the money in the CD for the agreed-upon period, the bank will provide the interest rate you accepted when you signed up. This is a fixed rate, meaning that it will not change during the life of the CD. A CD’s rates are usually higher than even high-yield savings accounts.
An 18-month CD is a popular option for those who want to invest their money and get a higher interest rate but only have their cash tied up for a short time.
If you leave the money in the CD, you’ll get the interest and initial investment. If you pull the money from the CD early, you will face a penalty that could wipe out the interest you earned (and then some).
Which Banks Have the Best CD Rates?
Many banks offer high-yield CDs, competing intensely to offer top rates. We’ve listed some of the best CD accounts to help you find ones that align with your financial goals.
Where to Find the Best 18-Month CDs
Many banks offer CDs of various terms and minimums. These are some of the top banks for choosing online CDs. Think about what matters most to you and then compare these banks to find the one that suits your needs.
Discover® Bank
Discover is a tried-and-true bank that offers a wide variety of products, including CDs with consistently above-average interest.
The most common are the 1-year and 5-year terms, which begin earning money on as little as one dollar. There’s no minimum opening deposit, which puts it within the reach of all savers.
Tab Bank
With consistently high rates and eight CD terms to choose from, TAB Bank requires a $1,000 minimum to open each of them.
The terms range from 6 to 60 months, perfect for CD laddering to protect your investment. Some fees are associated with this account, so read the fine print before opting in.
Seattle Bank
Seattle Bank offers four terms: 12 months, 18 months, 24 months, and 36 months. All terms renew at 12-month intervals.
The bank says it has some of the highest potential rates for the 18-month CD, but keep in mind that these rates are always subject to change until you lock in your term. It’s a minimum of $1,000 to open any CD here.
Barclays
For complete banking services, no matter where you are in the country, Barclays is a potential solution.
Six options for CDs range from 12 months to 60 months, with the 18-month CD offering some of the highest rates.
No minimum balance or deposit is required to open the account, but there might be fees, so check the fine print.
Synchrony
Synchrony Bank offers nine options for CDs, including those from three months to 60 months.
The 18-month CD has among the highest rates offered by the bank. There is no minimum balance required.
You can withdraw the interest at any time without penalty, but remember that doing so will substantially reduce your savings rate.
Pros and Cons of an 18-Month CD
As with any banking product, there are some pros and cons. Here’s what to expect from the 18-month CD.
Pros
- You get a fixed interest rate that won’t change during the life of the CD
- As with other terms, your money is tied up for 18 months rather than several years
- The interest rate is quite competitive across all banks that offer CDs
- Many banks offer the highest rates on the 18-month CD rather than the other terms
- Some banks allow you to open a CD with as little as one dollar
Cons
- If you take the money out of the CD before the 18 months is up, you will pay a penalty
- Sometimes, the variable interest rate might be higher than the fixed rate you’re getting with the CD
- Some banks might require a high initial deposit to open a CD
Who Are 18-Month CDs Best For?
These CDs work well for someone who wants the comfort of investing in a safe, secure financial option but doesn’t want to tie their money up for too long.
Consumers who choose an 18-month CD will enjoy a fixed rate, so many will opt to put additional money in a savings account that earns a variable rate, thus getting the best of both worlds.
If you have cash you don’t mind keeping in one safe place for 18 months and don’t think you will need to withdraw any of it, a CD could be an excellent home for your money.
When Is a CD the Right Choice?
A CD might be right for you when interest rates are high, and you can afford to let your money sit in the CD to earn interest over the term.
If you are looking to save for something specific, such as a vacation or home improvement, using a CD to get the highest rates possible makes sense.
On the other hand, if you are close to retirement, it might be better to open a money market account or another option that offers higher rates.
Remember that a CD shouldn’t function as an emergency fund. For that, a high-yield savings account is a better bet. It allows you to withdraw funds at any time without worrying about penalties.
Laddering is a method of choosing several CDs with different terms and putting money into each one. This allows you to move money around if you find a CD that brings you more interest. For instance, you could put $500 each into a 6-month, 12-month, and 18-month CD. When the 6-month CD matures, you can look at the current interest rates and decide if you want to pull that money out and reinvest in another CD with higher interest. But if interest rates drop, you still have the higher rates in your 12-month and 18-month CDs.
The penalty levied depends upon the bank. It can often be enough to negate any interest you might have gained thus far on the CD and could even go further, resulting in having less money than you put into it. Because of this, choose your CD carefully and make sure you can live without that money for the period of the CD term.
The money in your CD is covered up to $250,000 per account per depositor. If you choose to put more than $250,000 in a CD, keep in mind that if the bank ever becomes insolvent, you might not get any money back over that $250,000 threshold guaranteed by the federal government.
