Editor's Note: APYs listed in this article are up-to-date as of the time of publication. They may fluctuate (up or down) as the Fed rate changes. CNBC will update as changes are made public.
When it comes to building your savings, one rule remains constant: the earlier you start, the better.
Thanks to the compound interest you earn — essentially interest on top of interest — when you put your money into a high-yield savings account or certificate of deposit (CD), it can literally pay to keep your cash set aside for a long period of time as long as you find an account with a higher-than-average APY.
Unlike with high-yield savings accounts, however, the APY you earn with a CD is fixed for the entire term length. This is good news if interest rates are high, but not so much if they are low. CD term lengths can range from three months to five years. Usually, the longer the term, the higher the rate of return you earn.
A five-year CD is one of the longest terms offered and a great way to save up for something big if you feel comfortable setting aside cash for that long. Five-year CDs are popular with savers who are looking to set aside money for a milestone expense down the road, such as a down payment on a first home or a new car.
Below, we take a closer look at the five-year Ally Bank High Yield CD, breaking down the APY, ease of access to your cash, perks and fees, so you can decide if this is the best savings vehicle for you right for you.
0.85% fixed APY
For 5-year CD (or any CD that is 49 months or longer): Equal to 150 days of interest
See our methodology, terms apply.
The Ally Bank High Yield CD currently offers a fixed 0.85% APY on its five-year CD. With the national average rate for a five-year CD at 0.34% APY according to the FDIC, this is nearly three times the national average.
Ally Bank compounds interest daily.
Those interested in more than just CDs can score at online-only Ally Bank.
It offers everything from checking and savings accounts, to trading platforms, personal loans and mortgage refinancing. And its range of financial products come highly rated — CNBC Select also recommends the Ally Online Savings Account and Ally Interest Checking Account.
We ranked the five-year Ally Bank High Yield CD as one of the best long-term CDs, but for those CD savers looking for something else, Ally Bank offers options, including a Raise Your Rate CD, No Penalty CD and Select CD.
As is the norm with traditional and high-yield CDs, if you open an Ally Bank High Yield CD you can't access your cash until the end of the CD term length, or you'll be hit with an early withdrawal penalty fee (see the fees section for more info below).
When your Ally Bank High Yield CD matures, you can withdraw your money at no charge during a 10-day grace period. To plan ahead, you can schedule a transfer prior to maturity to move funds to another Ally account or to an external bank account. Otherwise, if you take no action, Ally will automatically renew the CD term at the current APY. The bank also automatically rewards account holders when they renew their CD with a 0.05% Loyalty Reward added to their CD account, which will boost your APY slightly.
In addition to offering various types of CDs and a Loyalty Reward when you renew, Ally Bank stands out for being super user-friendly.
Customer reviews report that Ally Bank's website and mobile app are both easy to use and its 24/7 live customer service available over the phone, through online chat or on the app comes in handy.
To open a CD account, you'll need your basic personal information and Social Security number. Before you sign up, check out the Straight Talk Product Guide, which is easy to follow and provides information on Ally Bank services, fees and policies.
The best part about the Ally Bank High Yield CD is that there is no minimum deposit to open an account and start earning interest. In our research, the best CDs usually require at least a $500 minimum. You can only make one deposit into the Ally Bank High Yield CD when you open the account, so while there are no minimums, it's not a bad idea to deposit as much as you feel comfortable saving since you only get one opportunity.
There are no monthly maintenance fees, which is typical of CDs.
Withdrawing your money early from Ally's five-year CD (or a CD that has a term length of 49 months or more) could cost you 150 days of interest (assuming the CD was purchased or renewed on or after Dec. 7, 2013). It is first deducted from the accrued interest and then, if necessary, the principal.
The five-year Ally Bank High Yield CD is undoubtedly a smart choice if you can commit to not touching your savings for an extended length of time.
Not only does it offer a higher-than-average APY, but there is no required minimum balance, an automatic Loyalty Reward when you renew and high-rated customer service.
Before you sign up for a five-year CD, take a look APYs and do your research so you know if interested rates are expected overall to go down or up. And be sure you have a separate savings account you can access for emergency purposes.
If five years is too long, consider a CD with shorter terms, such as the following: the three-month BrioDirect High-Rate CD, the six-month iGObanking High-Yield iGOcd®, the one-year CFG Community Bank CD or the three-year First National Bank of America CD.
To determine which certificates of deposit (CDs) offer the best return on your money, CNBC Select analyzed dozens of CD accounts offered by online and brick-and-mortar banks, including large credit unions. We narrowed down our ranking by only considering those high-yield or traditional CDs that offer competitive APYs, or higher-than-average rates, as well as low minimum deposits requiring $1,000 or less to open an account and zero monthly maintenance fees (which is typical of CDs).
We did not include CDs offered by credit unions on this list, as well as specialty CD types like no-penalty CDs (for easy withdrawals), add-on CDs (for making additional contributions), jumbo CDs (for large deposits) and IRA CDs (for retirement).
When rating our top five CD accounts, we ranked the best in the following categories: three-month CD, six-month CD, one-year CD, three-year CD and five-year CD.
While the accounts we chose in this article consistently rank as having some of the highest APY rates, we also compared each CD account on a range of features, including penalties for early withdrawal, website and mobile features, insurance policies and customer reviews when available. We also considered users' deposit options and the frequency with which the interest compounds.
All of the CD accounts included on this list are FDIC-insured up to $250,000 per person. If you are opening a joint account CD with a spouse, the insurance limit is doubled.
The rates and fee structures banks advertise for their CD accounts are not guaranteed forever. They are subject to change without notice and they often fluctuate in accordance with the Fed rate. If you open a CD account, however, you are locked into that APY offered at account opening for the entire term length.
Your earnings depend on the CD term length, the amount you deposit, the APY offered when you opened the account and any associated fees. Generally, a longer term with a larger deposit and a higher interest rate will earn you the most money. Any early withdrawals may result in penalty fees that lower your principal balance/earnings.
To open a CD account for the first time at a bank, most banks and institutions require a deposit of new money, meaning you can't transfer money you already had in an account at that bank.