What Impacts Your CD's Interest Rate?

1 min read
June 10, 2022

What Impacts Your CDs Interest Rate

A certificate of deposit (also called a "CD" or "certificate") usually offers a higher interest rate than a traditional savings account. However, there are several internal and external factors that can impact a CD's interest rate. Here's what can affect how much you earn on a certificate.


This is the most influential factor on your rate. When opening a CD, you'll need to pick a "term," or how long you'll be investing the funds. Terms typically range from six months to five years. During this time, your money won't be available to withdraw without a penalty. The longer the term is, the higher your interest rate will be.

Deposit Amount

As with any savings account, the more money you're able to invest, the more you'll earn in interest. For some accounts, a minimum deposit amount is required on higher-interest-rate CDs.

Financial Institution

The institution you select may determine the rate you receive. For example, the rates between a local credit union and a national bank could differ simply based on how competitive they're each able to make their rates at that time. Consider shopping to find the financial institution that can offer you the best return on your investment.

Other Interest Rates

The interest rates of similar accounts or other benchmark rates can impact what CD rates are offered by your financial institution. When federal rates rise or fall, this may also impact what happens at a local level.