The Best CD Rates in Alabama for 2025

Alabama is home to a multitude of banks–both large and small. Given this variety, residents might struggle to find and compare the numerous certificates of deposit (CDs) available. To simplify your search, we’ve reviewed these options to recommend the best CD rates for savers in Alabama.

The Best CD Rates in Alabama

Valley National Bank

Valley National Bank offers excellent CD rates on all their available maturity terms ranging from 3 months to 4 years. Promotional CD rates may also be available. The minimum opening deposit for Valley National Bank CDs is $500 (varies for promotional CD rates).

Bank Independent

Bank Independent offers a comprehensive range of CD maturity terms–3 months to 5 years–that all come with strong interest rates and can be opened online. The minimum opening deposit for Bank Independent CDs is $1,000.

Renasant Bank

Renasant Bank runs limited-time promotions on their CDs with very high interest rates on shorter maturity terms. Additionally, the CDs can be used to secure a Renasant Bank personal loan. The minimum opening deposit for Renasant Bank CDs is $10,000.

Lock In The Highest CD Rates Before Interest Rates Crash Again

The Federal Reserve plans to continue dropping interest rates. To ensure that you continue to generate reliable returns for years to come, consider a CD now to lock in the highest available rates:

Methodology

To pick the best CD rates in Alabama, the MyBankTracker team evaluated the certificate of deposit accounts offered by the top 50 banks by deposit market share in Alabama (based on FDIC June 2024 data) with more than 5 retail branches in the state--including coverage and availability in major cities such as Huntsville, Birmingham, Montgomery, Mobile, and Tuscaloosa.

The top recommendations are the results of analyzing the CDs based on the following criteria:

• Annual percentage yield (APY) for each CD’s corresponding maturity term
• The number of CD maturity terms available from the bank with which their corresponding APYs are competitive
• Minimum opening deposit requirements

How Do CDs Work?

Certificates of deposit (CDs) are time deposits offered by banks with a fixed interest rate and maturity date. They differ from traditional savings accounts, as they require locking in funds for a fixed term in exchange for a guaranteed interest rate. This fixed term can range from a few months to several years.

When you open a CD, you deposit a sum of money, known as the principal, for a specified term. During this time, your money earns interest at a fixed rate, which is usually higher than a traditional savings account. The interest rate is determined by the bank and is influenced by market conditions.

In exchange for the higher interest rate, you agree to keep your money locked in the CD for the specified term. If you withdraw your funds before the maturity date, you'll typically face an early withdrawal penalty.

How to Pick a Certificate of Deposit

Choosing the right CD involves considering several factors. Here are some key considerations:

Interest rate

The interest rate is a critical factor in selecting a CD. Compare rates from different banks to ensure you're getting the best deal. A higher interest rate can significantly impact your earnings over time.

Maturity term

CDs come with varying term lengths, ranging from short-term (a few months) to long-term (several years). Short-term CDs offer more liquidity, while long-term CDs provide higher interest rates. Consider your financial goals and time horizon when selecting a term.

Minimum opening deposit

The minimum opening deposit required for a CD varies across banks. Some banks may require a minimum deposit of $1,000 or more, while others may have lower or no minimum deposit requirements.

Early withdrawal penalty

If you withdraw your funds before the maturity date, you'll face an early withdrawal penalty. This penalty can be a flat fee or a percentage of the withdrawn amount. Understand the penalty terms before opening a CD.

Flexibility options

Some CDs offer flexibility options, such as:

• Bump-up CDs: Allow you to take advantage of higher interest rates if they rise during the term.
• Add-on CDs: Permit additional deposits during the term.
• Step-up CDs: Automatically increase the interest rate at specified intervals.

Compared to Online CDs Available Nationwide

Online banks should be considered when researching CDs. Online CDs often offer:

• Higher interest rates compared to traditional brick-and-mortar banks.
• Lower minimum deposit requirements, sometimes as low as $1.
• Greater flexibility and convenience, with 24/7 account access.

FDIC Insurance

The FDIC (Federal Deposit Insurance Corporation) insures CDs up to applicable limits, typically $250,000 per depositor, per insured bank. This means your deposits are protected in case the bank fails.

Most banks, including online banks, are FDIC-insured. Always verify a bank's FDIC status before opening a CD.

FAQs

What happens when a CD reaches maturity? Does it renew?

When a CD reaches maturity, you'll typically receive a notice from the bank. You can then choose to:

• Withdraw your funds, including interest earned.
• Renew the CD for another term, often with the option to adjust the term or interest rate.
• Roll over the CD into a new CD with a different term or interest rate.

What is a CD ladder?

A CD ladder is a strategy involving the purchase of multiple CDs with staggered maturity dates. This approach allows you to:

• Take advantage of higher interest rates for longer-term CDs.
• Maintain liquidity by having CDs mature at regular intervals.

How is interest accrued in a CD?

Interest in a CD is typically accrued monthly or daily. The accrued interest is then added to the principal at specified intervals, such as monthly, quarterly, or annually.

How are interest earnings in CDs taxed?

Interest earnings from CDs are considered taxable income. You'll receive a 1099-INT form from the bank at the end of each year, showing the interest earned. Report this interest on your tax return.