The Best CD Rates in California for 2025
With its massive population and thriving economy, California boasts an extensive array of banking institutions – from national giants to local favorites. Many Golden State residents find themselves overwhelmed when navigating the vast landscape of certificates of deposit (CD) offerings. To simplify your search, we've thoroughly analyzed the market to highlight the most competitive CD rates currently available to Californians.
The Best CD Rates in California
Zions Bank
Zions Bank offers CDs with maturity terms ranging from 7 days to 5 years. The bank keeps CD rates rather impressive across the board–they are very strong compared to what you might find with the big national banks. The minimum deposit requirement for Zions Bank personal CDs is $1,000.
BMO Bank
BMO Bank is known to offer CD rate specials from time to time that are highly competitive–these tend to have uncommon maturity terms. But, they still could span different timeframes, such as 13 months to 59 months, which means there is likely a special CD maturity term that fits your savings goal. The minimum deposit requirement for BMO Bank CDs is $1,000.
Umpqua Bank
Umpqua Bank provides very competitive CD rates on shorter maturity terms, in addition to promotional CD rates on terms that vary. The minimum deposit requirement for Umpqua Bank CDs is $1,000.
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 California, the MyBankTracker team analyzed the certificate of deposit accounts offered by the top 50 banks by deposit market share in California (based on FDIC June 2024 data) with more than 5 retail branches in the state--for coverage and availability in major cities including Los Angeles, San Francisco, San Diego, San Jose, Fresno, and Sacramento.
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 financial products offered by banks and credit unions that provide a guaranteed return on your investment. Unlike regular savings accounts, which allow unlimited access to your funds, CDs require you to deposit money for a specific time period—known as the term or maturity period. In exchange for this commitment, the financial institution pays you a fixed interest rate that is typically higher than rates offered on standard savings accounts.
When you open a CD, you agree to leave your money untouched for the entire term, which can range from a few months to several years. The bank uses these committed funds to make loans to other customers, which is why they can offer higher interest rates—they have certainty about how long they can use your money. This locked-in arrangement creates a predictable investment that guarantees your principal amount plus a specific return, making CDs a popular choice for conservative investors or those with specific time-based financial goals.
How to Pick a Certificate of Deposit
Interest rate
The interest rate is perhaps the most critical factor when selecting a CD. This rate determines how much your investment will grow over the term. When comparing CDs, even small differences in interest rates can significantly impact your earnings, especially for longer terms or larger deposits. For example, a 0.5% difference on a $10,000 CD over five years could result in hundreds of dollars of additional income.
Interest rates on CDs typically follow a pattern: longer terms usually offer higher rates as compensation for committing your money for extended periods. However, market conditions can create situations where shorter-term CDs occasionally offer comparable or even better rates than longer ones, so it's important to compare current offerings before deciding.
Maturity term
The maturity term is the length of time you agree to keep your money in the CD. Terms typically range from three months to five years, though some institutions offer even longer periods. Selecting the right term involves balancing your liquidity needs with your desire for higher returns:
- Short-term CDs (3-12 months) provide more flexibility and quicker access to your funds but generally offer lower interest rates.
- Medium-term CDs (1-3 years) strike a balance between competitive rates and a reasonable time commitment.
- Long-term CDs (3-5+ years) usually offer the highest interest rates but require your money to remain invested for an extended period.
Choose a term that aligns with your financial timeline. If you anticipate needing the funds within a year, a short-term CD would be more appropriate despite the lower rate.
Minimum opening deposit
Financial institutions require various minimum deposits to open a CD, ranging from as little as $1 at some online banks to $10,000 or more at traditional banks. This requirement affects your ability to invest based on your available capital. Larger minimum deposits sometimes qualify for higher interest rates, creating a tiered rate structure, though this is not universal.
When evaluating minimum deposit requirements, consider:
- How much money you can comfortably set aside
- Whether the potential rate increase justifies a larger deposit
- If your money might be better diversified across multiple CDs of different terms
Early withdrawal penalty
Most CDs impose penalties if you withdraw your funds before the maturity date. These penalties typically consist of forfeiting a portion of the interest earned, often expressed as a certain number of months' worth of interest. For example, a bank might charge three months' interest for early withdrawal from a one-year CD, or six months' interest for a five-year CD.
These penalties can significantly reduce your returns and sometimes even eat into your principal if you withdraw very early in the term. Before opening a CD, carefully review the early withdrawal penalties and assess the likelihood that you might need access to your funds prematurely. If flexibility is important to you, consider a CD with more favorable early withdrawal terms, even if it comes with a slightly lower interest rate.
Flexibility options
Some CDs offer special features that provide additional flexibility or opportunities for increased returns:
- Bump-up CDs allow you to increase your interest rate once or twice during the term if rates rise.
- Add-on CDs permit additional deposits after the initial opening, allowing you to contribute more money over time.
- No-penalty CDs (also called liquid CDs) allow withdrawals without penalties after a short initial period, though they typically offer lower interest rates.
- Step-up CDs automatically increase your interest rate at predetermined intervals throughout the term.
These flexible options often come with trade-offs, such as lower initial interest rates. Evaluate whether the additional features justify any reduction in the base rate.
Compared to Online CDs Available Nationwide
When researching CDs, it's important to consider online banks alongside local institutions. Online banks typically offer more competitive interest rates on CDs because they have lower overhead costs than brick-and-mortar banks. These savings are often passed on to customers in the form of higher returns on deposit products.
The advantages of online CDs include:
- Higher interest rates—often 0.5% to 1% above national averages
- Lower minimum deposit requirements, sometimes as little as $1
- More diverse term options, including odd-length terms like 7 or 13 months
- User-friendly digital platforms for account management
Online banks make the CD opening process straightforward through their digital interfaces, and many provide excellent customer service through phone and chat support. The main disadvantage is the lack of in-person banking services, which some customers prefer, especially for large transactions.
FDIC Insurance
FDIC (Federal Deposit Insurance Corporation) insurance is a critical safety feature for CDs. This federal program protects your deposits up to $250,000 per depositor, per bank, per ownership category if the financial institution fails. For joint accounts, the coverage doubles to $500,000.
Nearly all reputable banks and credit unions in the United States are covered by FDIC insurance (or NCUA insurance for credit unions), including online banks. This protection ensures that even if your bank goes out of business, your CD principal and accrued interest are safe up to the coverage limits.
Before opening a CD, verify that the institution is FDIC-insured by checking the bank's website or using the FDIC's BankFind tool. If your deposits exceed $250,000, consider spreading them across multiple institutions to maintain full FDIC coverage.
FAQs
What happens when a CD reaches maturity? Does it renew?
When a CD reaches maturity, you typically have a grace period of 7-10 days to decide what to do with the funds. Your options include:
- Withdraw the full amount (principal plus earned interest)
- Reinvest in a new CD with different terms
- Allow the CD to automatically renew for the same term at the current interest rate
If you take no action during the grace period, most banks will automatically renew your CD for the same term at the current interest rate, which could be higher or lower than your previous rate. Banks are required to notify you before your CD matures, but it's advisable to mark the maturity date on your calendar and proactively plan your next steps.
What is a CD ladder?
A CD ladder is a strategic approach to CD investing that involves dividing your investment among multiple CDs with staggered maturity dates. For example, instead of investing $10,000 in a single five-year CD, you might invest $2,000 each in 1-year, 2-year, 3-year, 4-year, and 5-year CDs.
This approach provides several benefits:
- Regular access to a portion of your funds as each CD matures
- Ability to reinvest at potentially higher rates as CDs mature
- Higher average interest rate compared to keeping all funds in short-term CDs
- Reduced impact of interest rate fluctuations on your overall investment
As each CD matures, you can reinvest it into a new long-term CD, maintaining the ladder structure indefinitely.
How is interest accrued in a CD?
Interest on CDs typically accrues daily, though it may be compounded at different intervals—daily, monthly, quarterly, or annually—depending on the bank's policies. Compounding means that you earn interest not only on your initial deposit but also on previously accrued interest.
The frequency of compounding affects your total returns, with more frequent compounding resulting in slightly higher yields. When comparing CDs, look at the Annual Percentage Yield (APY) rather than the stated interest rate, as the APY accounts for the effects of compounding and provides a more accurate picture of your expected returns.
How are interest earnings in CDs taxed?
Interest earned on CDs is taxable as ordinary income in the year it is paid or made available to you, even if you don't withdraw the funds. For CDs with terms longer than one year, you must report and pay taxes on the interest accrued each year, even though you haven't received the money yet.
Banks issue Form 1099-INT for CD interest of $10 or more, and you must include this income on your tax return. The interest is taxed at your regular income tax rate. If you're in a high tax bracket, you might consider holding CDs in tax-advantaged accounts like IRAs to defer or potentially reduce taxation on the interest earnings.
