Fixed deposit rates vary by bank, term length, and deposit amount—and they change monthly
No single bank consistently offers the highest fixed deposit rate across all term lengths. Banks adjust their rates based on market conditions, funding needs, and competition, so the leader for a 1-year deposit may not be the leader for a 5-year deposit. The rate you see today may be different next month.
What matters is knowing where to look and what affects the rate you'll actually receive. Large national banks typically offer lower rates than smaller regional or online banks, because they have more stable funding sources. Online banks and newer fintech platforms often post higher rates because they have lower overhead costs and need to attract deposits more aggressively.
The second factor is term length. A 6-month fixed deposit will pay less than a 3-year deposit at the same bank. A 5-year deposit may pay more or less than a 3-year deposit, depending on what the bank expects interest rates to do. The third factor is deposit size—some banks offer higher rates on deposits above a certain threshold, often $25,000 or $100,000.
Key Takeaways
- Online banks and regional banks typically post higher fixed deposit rates than large national banks, though they may have lower deposit insurance limits.
- The highest rate for a 1-year term is rarely the highest rate for a 5-year term at the same bank, so compare rates within the term length you need.
- Banks change their rates monthly or more often, so a rate you see today may be lower or higher in two weeks.
- Deposit size matters—many banks offer higher rates on deposits above $25,000 or $100,000, so check the rate ladder before you decide.
- Your deposit is insured up to $250,000 per bank by the FDIC, regardless of the rate, so a higher rate at an unfamiliar bank carries no extra risk if it is FDIC-insured.
Where to find current rates for different term lengths
The fastest way to compare is to visit the websites of banks you already know, then check one or two online banks you do not. Write down the rate for the exact term length you want—do not compare a 2-year rate to a 3-year rate, because they will differ. Include the minimum deposit required and any penalties for early withdrawal.
Large national banks (Chase, Bank of America, Wells Fargo, Citibank) typically offer rates between 4.0% and 5.5% depending on term length. Regional banks and credit unions often offer 4.5% to 5.8%. Online banks (Marcus by Goldman Sachs, Ally Bank, American Express Personal Savings, Discover Bank) frequently post rates between 4.75% and 5.35%, though these change weekly.
The FDIC website does not publish a list of current rates, but Bankrate, DepositAccounts, and Money Market Rates all update their rate tables daily. These sites let you filter by term length, minimum deposit, and bank type. You can also call banks directly—the rate on their website is usually the rate you will receive, but it is worth confirming.
How deposit size and term length affect your rate
Most banks publish a single rate for each term length, but some offer a rate ladder—a higher rate if you deposit more money. A bank might offer 4.8% on a 2-year deposit of $10,000 to $24,999, and 5.1% on the same term if you deposit $25,000 or more. The difference is usually 0.2% to 0.5%, which adds up if you are depositing six figures.
Term length affects rate in two ways. First, longer terms usually pay more because the bank locks in your money for longer and can lend it out for longer. Second, the relationship between short and long rates changes with economic conditions. When the Federal Reserve is expected to cut rates, banks may pay more for short terms to attract deposits before rates fall. When rates are expected to rise, banks may pay more for long terms to lock in customers.
If you are unsure whether to choose a 2-year or 3-year term, check the rate difference. If a 3-year deposit pays only 0.1% more, the extra year of locked-in money may not be worth it. If it pays 0.5% more, the extra return over three years is meaningful.
Why online banks and credit unions often post higher rates
Online banks have no physical branches, so they spend less on real estate, staff, and overhead. They pass some of that savings to depositors in the form of higher rates. They also compete for deposits by advertising aggressively, so they need to offer rates that stand out. Marcus by Goldman Sachs, Ally Bank, and American Express Personal Savings are examples of banks that consistently rank near the top of rate lists.
Credit unions work the same way—they are member-owned, not shareholder-owned, so they can return profits to members as higher rates. If you belong to a credit union, check their fixed deposit rates before you assume a bank will beat them. Some credit unions offer rates competitive with online banks, especially if you have a checking account or other relationship with them.
The trade-off is that online banks and smaller credit unions may have lower deposit insurance limits or less familiar customer service. Your deposit is still insured up to $250,000 by the FDIC or NCUA (for credit unions), so the safety is the same. But if you need to call someone or visit a branch, a large national bank may be more convenient.
What to check before you open a fixed deposit account
Before you move money, confirm three things: the early withdrawal penalty, the FDIC or NCUA insurance status, and whether the rate is fixed for the full term.
Early withdrawal penalties vary widely. Some banks charge a flat fee ($25 to $100). Others charge a penalty equal to a certain number of months of interest—for example, 6 months of interest on a 2-year deposit. If you think you might need the money before the term ends, a bank with a low penalty is worth choosing even if its rate is slightly lower. Read the account agreement or call and ask directly.
Check that the bank is FDIC-insured (for banks) or NCUA-insured (for credit unions). This information is on the bank's website, usually in the footer or under "Security" or "About Us". If a bank is not insured, your deposit is not protected if the bank fails.
Confirm that the rate is fixed for the entire term. Some banks offer a promotional rate for the first few months, then drop the rate for the rest of the term. The account agreement will say whether the rate is fixed or variable. Fixed is what you want for a fixed deposit.
How rates change and when to lock in
Banks change fixed deposit rates based on what the Federal Reserve does and what they expect the Fed to do next. When the Fed raises its benchmark rate, banks usually raise fixed deposit rates within days or weeks. When the Fed cuts rates, banks usually cut fixed deposit rates, but sometimes they wait or cut more slowly.
If the Fed has been raising rates and you expect it to start cutting soon, locking in a high rate now makes sense—you will earn that rate for the full term even if rates fall. If the Fed has been cutting and you expect more cuts, waiting a few weeks might get you a lower rate, but the difference is usually small (0.1% to 0.3%), so the certainty of locking in now may be worth more.
You do not need to time the market perfectly. The difference between the best rate available today and the best rate available in two months is usually less than 0.25%, which is worth less than the stress of waiting. If a rate looks reasonable to you and you have the money ready, opening the account is a reasonable choice.
Frequently Asked Questions
Can I move money between fixed deposits at different banks to chase higher rates?
Yes, but only when each deposit matures. If you open a 1-year fixed deposit today and a better rate appears in 6 months, you cannot move the money without paying an early withdrawal penalty. When the 1-year term ends, you can move the money to a new bank offering a higher rate. Some people open multiple deposits at different banks with staggered maturity dates so they can move money more frequently.
What happens to my money when the fixed deposit term ends?
The bank will either automatically renew the deposit at the current rate, or move the money to a regular savings account. Check your account agreement or call the bank to confirm what happens at maturity. If you want to move the money to a different bank, you usually have a grace period (often 7 to 10 days) after maturity to withdraw without penalty.
Is a higher rate worth choosing a bank I have never heard of?
If the bank is FDIC-insured and the rate difference is meaningful (0.5% or more), yes. Your deposit is equally protected at a small online bank as at a large national bank. The only reason to choose a familiar bank is if you value the convenience of a branch or phone support, or if the rate difference is tiny (0.1% or less).
Do I have to pay taxes on the interest I earn from a fixed deposit?
Yes. Interest from a fixed deposit is taxable income in the year you earn it. The bank will send you a 1099-INT form at tax time showing how much interest you earned. You report this on your tax return. Some people choose shorter-term deposits to spread the taxable interest across multiple years, but the total tax you pay is the same.
What is the difference between a fixed deposit and a CD?
In the United States, they are the same thing. A certificate of deposit (CD) is the formal name. "Fixed deposit" is the term used in other countries. The mechanics are identical—you deposit money for a set term at a fixed rate, and you pay a penalty if you withdraw early.