American Express CDs Offer Competitive Rates for Short-Term Goals
American Express is known for its credit cards, but its deposit accounts are also worth considering. American Express CDs offer no fees and competitive rates on shorter terms, making them a good option for those looking to maximize returns on short-term financial goals. While they might not be the best choice for long-term savings, they provide a solid way to earn interest on funds you’ll need in the near future.
Key Takeaways:
- No Minimum Deposit: Amex CDs don’t require a minimum balance to open, making them accessible to everyone.
- Competitive Rates for Short-Term CDs: Amex offers some of the highest rates on shorter-term CDs, like 11-month or 12-month terms.
- No Monthly Fees: You won’t have to worry about paying a monthly maintenance fee, keeping all your earnings yours.
- Early Withdrawal Penalty: Like most traditional CDs, withdrawals before maturity will result in a penalty, but Amex’s penalty structure is clear and transparent.
How Do Amex CDs Work?
Rates and Terms
American Express offers a variety of CD terms, ranging from 11 months to five years, with rates up to 4.50% APY. While these rates are competitive, they are higher for shorter terms, so if you’re looking for the most attractive yield, consider shorter-term CDs. Longer terms generally offer slightly lower rates.
For example, a $5,000 deposit in an 11-month CD earning the highest rate of 4.50% APY would yield $201 over the CD’s term.
It’s important to note that Amex doesn’t offer specialized CDs like step-up CDs or no-penalty CDs, which might be more attractive for certain financial situations.
Fees
Amex CDs stand out with no minimum deposit requirement and no monthly maintenance fees. However, like most traditional CDs, an early withdrawal penalty applies if you withdraw your deposit before the account matures.
The penalty structure for Amex CDs is as follows:
- Under a year: 90 days of interest
- One year to less than four years: 270 days of interest
- Four years to less than five years: 365 days of interest
- Five years or longer: 540 days of interest
Are Amex CDs Right for You?
Amex CDs are a good option if you’re looking for a simple and straightforward account with no minimum deposit, no monthly fees, and solid rates on shorter terms. While their longer-term CDs may not offer the highest rates in the market, they provide a reliable way to earn interest on your money.
However, keep in mind that you won’t have access to your money until the CD matures. So, make sure you’re confident you won’t need the funds before the term ends.
Alternative CDs
If you’d like to earn a higher rate than what Amex offers, Synchrony Bank may be a good alternative. They offer rates up to 5.15% APY for CD terms ranging from three months to five years. They also offer a 24-month bump-up CD, giving you the option to increase your APY and interest rate during the term. Like Amex, there are no monthly fees or minimum balance requirements.
Marcus by Goldman Sachs is another option, offering CD terms from six months to six years with rates up to 5.10% APY. While a $500 minimum deposit is required, there are no monthly maintenance fees. You can also choose from high-yield CDs, rate bump CDs, and no-penalty CDs to suit your specific needs.
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