Four banks where your money earns more than 4%

Photo (c) Peter Dazeley - Getty Images

For the first time in two decades, it actually pays to save

For more than 20 years savers have earned next to nothing on savings accounts and certificates of deposit (CD). During that time, inflation remained low and so did interest rates. 

In the last year, that’s changed. A number of banks have raised the rates they pay on deposits, even short-term deposits. Since Treasury bond yields have risen banks are having to compete for cash by paying higher interest rates.

While your local bank may offer a competitive rate, we found four banks that are paying north of 4% on fairly short-term CDs and may be worth consideration. All of the banks are insured by the Federal Deposit Insurance Corporation (FDIC) for deposits of up to $250,000.

Wells Fargo

Local and regional banks tend to offer higher interest rates than the large national banks but Wells Fargo is an exception. Currently, Wells Fargo pays 4.02% on a five-month CD when you open one of its Special Fixed-Rate CD accounts, with a minimum deposit of $5,000.

Ally Bank

Ally Bank, a national, internet-only institution, currently has a couple of compelling offers. Ally’s High-Yield CD pays an interest rate based on the length of the term. A three-month CD pays only 2% but a 12-month CD pays 4.5%. Lock it in for 18 months and the rate rises to 4.8%.

There is no minimum deposit required but you’ll pay a penalty if you withdraw the money before the term is up.

For people who think they may need to tap their savings before the end of the term, Ally’s No Penalty CD may be a good alternative. It pays 4.25% interest and you can withdraw all of your money any time after the first six days following the date you funded the account, and keep the interest earned with no penalties. There is no minimum deposit.

CIT Bank

CIT Bank, a division of First Citizens Bank, pays an even high rate of interest. Its six-month CD currently pays 5% with a $1,000 minimum deposit. It might be a good choice for savers who want a high rate of return but don’t want to tie up their money for more than six months.


Synchrony, another national, internet-only bank pays even more. It currently offers a 14-month CD that pays 5.15%. However, there is no minimum deposit required.

Synchrony also offers a No Penalty CD that pays 4.10%. It’s an 11-month term but there is no early withdrawal penalty if you need to access to your money.

For the first time in two decades, it’s now possible to sock money away and actually have it earn interest in a safe environment. As always, before making a major financial or investment decision it is a good idea to seek advice from a trusted and objective adviser.

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