Best 9-Month CD Rates for Short-Term Savings Goals: January 2020
Everyone has goals that they need to save for.
Whether you want to go on vacation, save for retirement, make a down payment on a house or just buy yourself something nice, knowing the best way to save money toward your goal can help you reach your goal sooner.
A certificate of deposit (CD) is a type of bank account that is designed to help you save money for a specific period of time. When you deposit money to a CD, you promise not to make a withdrawal for a set period of time, such as 9 months.
In exchange for this promise, the bank pays a higher rate of interest than it would for a more flexible account.
If you’re saving for an event that’s about 9 months away, a 9-month CD is a great place to put your extra money.
To help you get the best return possible, we surveyed more than 6,000 banks to find the best 9-month CD rates.
The Best 9-Month CD Rates
A lot of the time, you’ll find the best CD rates at lesser-known banks, many of which are online banks.
This is good news for people who want to get a great rate.
You can open an online bank account from anywhere in the U.S. All you need is a Social Security Number and a mailing address in the U.S.
Best 9-Month CD Rates
|Bank||APY||Minimum opening deposit||Early withdrawal penalty|
|TAB Bank||2.30%||$1,000||90 days of interest|
|CD Bank||2.30%||$10,000||3 months of interest|
|Sallie Mae Bank||2.25%||$2,500||90 days of interest|
|TIAA Bank||2.25%||$5,000||68 days of interest|
|BrioDirect||2.20%||$500||90 days of interest|
Where to Find the Best 9-Month CD Rates
When you’re opening a new CD, you’ll see offers for a huge variety of CDs with different terms and interest rates.
In general, CDs with longer terms pay more interest and online banks tend to offer the best rates.
If you find a short-term CD that pays a higher rate than a long-term CD, or a physical bank that has an unusually high rate, there is a good chance that the rate is promotional and will only apply for a short amount of time.
9-Month CDs vs. Savings Accounts: Pros and Cons
CDs offer one incredibly significant advantage over savings accounts: they pay a higher rate of interest. Any CD that is worth opening will offer a higher interest rate than a savings account.
Another benefit of a 9-month CD is that your interest rate is locked in.
Banks can and do change the interest rate they pay on savings accounts without notice. If rates fall, the money in your CD will keep earning the same rate, even as savings account rates drop.
When you deposit money to a CD you make a commitment to keep your money there for a set period of time. If you make a withdrawal, you have to pay a penalty.
This penalty can help force you to save. You don’t want to pay the penalty, so you’ll have even more reason to keep your money in the account for the full 9 months.
Not designed for easy withdrawal
As we just mentioned, you have to pay a penalty if you want to make a withdrawal before the CD’s 9-month term ends. Tying up your money for 9 months can be a commitment.
If you encounter a financial emergency while your money is in a CD, you won’t be able to use it to cover expenses without paying the fee.
9-Month CDs vs. 12-Month CDs: Pros and Cons
One of the benefits of opening a CD with a shorter term is that you have more flexibility.
With a CD that lasts 12 months, you only have to option of making a withdrawal once each year.
With a 9-month CD, you can choose to make withdrawals more often, making it easier to access your money if you need to.
Less interest rate risk
When you open a CD, you lock in your interest rate.
With a shorter-term CD, your interest rate is locked in for a shorter period of time.
If rates rise over the life of your 9-month CD, your money will be stuck earning the lower rate for a shorter period of time.
The reason that people choose to open long-term CDs is that they want to earn high rates of interest. The longer the term of a CD, the bigger the commitment you’re making.
The bigger the commitment, the higher the interest rate has to be to compensate you.
If you’re choosing a 9-month CD over a 12-month CD, you’ll have to settle for a lower rate.
Compared to Longer-Term CDs
When you open a CD, you have to choose the term of the CD. Most banks offer a huge variety of terms to choose from, from 3 months or less to 10 years or more.
Short-term CDs are more flexible but offer lower rates. Long-term CDs are less flexible but offer higher rates. It’s up to you to evaluate how much flexibility you are willing to sacrifice to earn a higher interest rate.
Interest rate risk
One downside of long-term CDs is interest rate risk.
Interest rates change every day and banks will often revise the rates that they pay on their savings accounts to match changes in market rates. CDs are different.
Once you open a CD, the interest rate of the CD will not change.
With a short-term CD, there isn’t a lot of time for rates to change. For long-term CDs, rates can change by huge amounts. In the past, there have been rate changes of 5%, 10%, or more over the course of just ten years.
If rates drop, your CD continues to earn the same rate, which means that you’re earning far more than someone who had parked their money in a savings account.
However, the opposite can be true.
If rates rise, you’ll be stuck earning less, with no way to get your money out of the account without paying a penalty.
What that means is that long-term CDs can be riskier. You’ll come out ahead if rates drop, but you could lose a lot of potential interest if rates rise during the life of your CD.
9-Month CD Early Withdrawal Penalties
When you open a CD, you’re making a commitment to keep your money in the account for the full term of the CD. If you make a withdrawal before the CD’s term has ended, you’ll be charged a fee.
Most banks calculate the fee using the amount of interest that you earn in a day. The longer the term of the CD, the more days’ interest that you’ll have to pay.
For a 9-month CD, a typical penalty is 90 days’ interest.
These penalties make it possible to lose money by opening a CD. If you make a withdrawal before you’ve earned enough interest to cover the fee, you’ll have to pay the remainder out of the principal that you deposited.
Sometimes, the bank to waive the penalty.
For example, the fee can be waived if you make a withdrawal within just a few days of opening the account. Many banks will also waive the fee in the event of the CD owner’s death.
When Does it Make Sense to Open a 9-Month CD?
Opening a 9-month CD is a good way to save toward goals or purchases that you’ll make in 9 months. 9-month CDs can also serve as part of a CD ladder.
Here are some examples of reasons you might open a 9-month CD.
- Saving for a vacation
- Setting aside a down payment for a car
- Planning for a large purchase such as a TV
- Setting aside extra holiday money to buy presents for the next year
9 months after you open your 9-month CD, the CD will mature. This is your opportunity to make a withdrawal from the account.
If you do want to make a withdrawal, make sure to do it quickly.
Most banks will give you a grace period of 7 to 10 days.
After that time, the balance of your CD will be rolled into a new CD with the same term.
If you want to make a withdrawal after that happens, you’ll have to wait for the new CD to mature or pay the early withdrawal penalty.
CDs are insured by the FDIC so you can feel confident that the money you deposit is as safe as it can be.
If you’re depositing close to this amount, don’t forget that the interest that you earn could drive your balance over $250,000. If that happens and the bank fails, the FDIC won’t reimburse you for the amounts over the $250,000.
If you’re fortunate enough to deposit close to $250,000 to a CD, consider splitting your deposit between multiple banks to ensure that your balances stay below the $250,000 limit.