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The Key Takeaways
- It’s smart if you plan to save up for next year’s house purchase to invest your downpayment money in a place that will give you a good return.
- Your timing is fortunate right now as the banks and credit unions pay near to their highest rates of deposit in 20 years.
- The best high-yielding savings accounts offer a great return and full flexibility if you are unsure about when you will buy a home.
- You know you’re not going to buy anything for some time? A CD with the highest return can be locked in for many months.
- A hybrid option also exists—bank accounts that pay a cash bonus if you leave your funds untouched for a couple of months or more.
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It's a Lucrative Time to Stash Cash In the Bank
Mortgage rates are a good way to compare. Because housing prices are high, you might be waiting until next year to buy a home in the hope that your monthly mortgage payment will become more affordable. Perhaps you want to wait a bit longer before purchasing a house in order to accumulate the funds for your downpayment.
It’s a great time to put money in the bank. Rates are close to historic highs. That’s thanks to the Federal Reserve’s aggressive 2022–2023 fight against post-pandemic inflation, which pushed the federal funds rate to its highest level since 2001 and left it there for over a year. The banks and credit unions responded by offering some of the best rates for savings and CDs in 20 years.
As a result, it's very easy to earn 5%-plus on your down payment funds right now—with a top high-yield savings account or one of the nation's best CDs, which guarantee your rate down the road. If you want to increase your downpayment fund, you can also choose a checking or savings account with a deposit bonus.
Not Sure When You'll Buy? You’re not sure when you will buy?
You should keep all your funds readily available if you are not sure when you will be able to take advantage of a real estate opportunity. This feature is available in high-yielding savings accounts, which allow you to deposit and withdraw money whenever you want. An account called “high-yield” Shopping around is always advisable.
Each week, we list the top 15 savings rates in America. Four other offers pay 5.00% and above. The nation’s top rate at the moment is a staggering 5.50%. If you compare that with the national average rate for savings accounts, which is 0.43% per annum (APY), you’ll see that you could earn more money by saving your down payment in a higher-paying savings.
Holding $25,000 for a month will yield you approximately $105 in interest. A national account with 0.43% interest on the same sum will only pay less than $9 per month. This difference adds up to about $630 over six months.
If you want to avoid any risk, open your savings account at a Federal Deposit Insurance Corporation bank (FDIC), or National Credit Union Administration credit union (NCUA). Your deposits of up to $250,00 will be insured if the institution fails.
Won't Buy for a Bit? You can secure your return with a CD
You can boost your downpayment even further if you are certain that you will not be buying a house for a while. This is possible by investing a portion or all of the money in a CD with a higher interest rate. The upside is that interest rates on CDs are locked in, so you’ll be guaranteed your high annual percentage yield (APY) for the CD’s full term—whether that’s 3 months, 6 months, a year, or even longer. Savings account rates, on the other hand, can be reduced at any moment.
It is a downside that you have to commit yourself to keeping your money in the CD for the entire term. It’s possible to get your money out early if you have an emergency. You’ll have to pay an early withdrawal fee that reduces your earnings. You can—and should—shop around to make sure the CD you choose has a mild penalty policy instead of a harsh one. You should choose a CD that will allow you to retain the funds until the maturity date.
Today, the top CD rates range between 6 months and 1 year. It’s also a good idea to lock in an upper-4% guaranteed return if the CD you choose is offered within your timeframe. Our daily list of the top CDs nationwide offers a wide range of choices.
Beyond our list of the best overall CD rates, you can also find term-by-term rankings—from 3 months up to 5 years—with our links at the end of this article. As with savings, you can keep your CD money protected by the federal government if you choose an FDIC credit union or bank.
You can also boost your down payment with a bank bonus
Another strategy you can use instead of—or in addition to—a high-yield savings account or CD is opening a bank account that offers a special cash bonus. Most of these offer a cash bonus in the range of a couple hundred dollars. Some offers go as high as $1,000. There are usually two types. Most checking accounts offer a bonus if direct deposits are set up within a specified time period. They may also specify a minimum amount for direct deposit.
Savings accounts bonuses, on the other hand, typically base their cash pay-out on you holding a certain lump sum of money in the account without touching it for a specified period—usually two to four months. The bonus can be earned by not withdrawing funds from the account during the qualifying time. You won’t pay a fee if you withdraw money early. The bonus that would’ve been given to you will be forfeited.
You’ll find even more choices if you can open a checking or saving account for your business. Some of these accounts pay $900 up to $1,000. Chase offers a $900 bonus for those who meet both the requirements of a savings and checking account bonus.
Live Oak Bank is offering a great deal on interest plus a bonus. You can get a $300 bonus and 4.30% annual percentage yield if you put away $20,000 for just two months. The APY plus the $300 cash bonus can net you $440 in just two months.
The Best Savings Accounts and CDs ranked Daily
This ranking is updated daily to ensure you get the highest deposit rate available.
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Note that the "top rates" quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. The national average includes many banks, even large ones, that offer CDs with this term. The national averages will always be low. However, the best rates can often be found by comparing different banks.
The Best Rates for Savings CDs
Investopedia ranks the highest-paying savings and CD accounts every day. It tracks rate information from more than 200 credit unions and banks across the country. The institution has to be federally-insured (FDIC, NCUA, or FDIC, for credit unions), with a deposit minimum of no more than $25,000, in order to make our list. The maximum amount of the deposit cannot be less than $5,000.
To qualify as a national bank, the banks must have branches in 40 or more states. Some credit unions may require that you donate $40 to an organization or charity to join if you do not meet the other criteria for membership (e.g. you live outside a particular area, or you work at a job in which you aren’t eligible). We exclude those credit unions who have a donation requirement of more than $40. Read our methodology to learn more about the way we select rates.
Article sources Investopedia encourages authors to use primary source material to support their articles. White papers, data from the government, interviews with experts, and original reporting are all examples. Where appropriate, we also refer to original research by other respected publishers. Learn more about how we produce accurate and impartial content by visiting our The editorial Policy.
Federal Reserve Board. "Open Market Operations."
FDIC. "National Rates and Rate Caps."
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