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Banking

The best 3-month CD for beginners looking to save and earn money for a short-term goal

CNBC Select reviews the online-only BrioDirect High-Rate CD so you can decide if it's right for you.

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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.

A certificate of deposit (commonly referred to as CD) is another type of savings account that banks and financial institutions offer where you can store your money.

CD term lengths vary, ranging between three months and five years, but is important that you choose a CD based on the term that works best for you. Once you deposit money into the account, you are locked into that interest rate and can't access your money until the CD term is over, unless you forfeit paying an early withdrawal penalty fee.

For beginner savers who want to try out a CD, a three-month CD makes the most sense as it only requires putting away your money for a short period of time. If you have plans coming up in the short-term, such as a big trip, a three-month CD can help you save (and grow) your money while keeping it out of reach so you aren't tempted to spend it.

The BrioDirect High-Rate CD ranks on CNBC Select's list of the top CD savings accounts because with a fixed 0.50% APY, it offers an interest rate that's more than six times the national three-month CD average.

Below, we take a closer look at the 3-month BrioDirect High-Rate CD by breaking down its annual percentage yield (APY), access to your cash, perks and fees so you can decide if this savings account is right for you.

BrioDirect High-Rate CD review

BrioDirect High-Rate CD

BrioDirect High-Rate CD
Information about the BrioDirect High-Rate CD has been collected independently by CNBC and has not been reviewed or provided by the bank prior to publication. Sterling National Bank is a Member FDIC.
  • Annual Percentage Yield (APY)

    0.50% fixed APY

  • Minimum balance

    $500 to open and start earning interest

  • Monthly fee

    None

  • Early withdrawal penalty fee

    For 3-month CD: 90 days interest, whether or not earned

See our methodology, terms apply.

Pros

  • Higher-than-average APY
  • Compounds interest daily and credits at maturity
  • Low minimum balance
  • No monthly fees
  • Website is easy to navigate

Cons

  • You can't access your money before your CD term ends
  • Early withdrawal penalty fee

BrioDirect High-Rate CD APY

The BrioDirect High-Rate CD currently offers a fixed 0.50% APY on its three-month CD. With the national average rate for a three-month CD at 0.08% APY, according to the FDIC, this is more than six times the national average.

BrioDirect compounds interest daily and credits it to your account at maturity (when your term is up). Note that when you have a CD term less than a year, the APY is still calculated as if you were holding that money in the account for a year. Generally, longer term CDs — with a larger deposit and a higher interest rate — will earn you the most money.

Access to your cash

BrioDirect is the digital subsidiary of Sterling National Bank, which has branches in New York and New Jersey, but its CDs (and high-yield savings accounts) are only offered online.

As is the norm with traditional and high-yield CDs, users don't have access to their cash until their CD term length is up (unless they withdraw early for a penalty fee).

Once your three-month term length ends, the BrioDirect High-Rate CD renews automatically for another three-month term at the current interest rate. To take out your cash, account holders have a seven-day grace period after the maturity date to withdraw funds or deposit more without penalty.

Perks

The biggest perk of banking with BrioDirect is that its website is easy to navigate. Though this seems obvious, not all online banks offer a seamless user experience.

To open an online CD account with BrioDirect, you need your driver's license, passport or state I.D. and Social Security number. New customers can make their initial deposits through ACH payment from an existing checking or savings account, or via check or wire transfer.

Fees

The minimum deposit is $500 to open and start earning interest with a three-month BrioDirect High-Rate CD, which is on the lower end for online CDs. There are no monthly maintenance fees, which is typical of CDs.

If you withdraw your money early you'll get hit with a penalty fee of 90 days interest (essentially the interest earned over the entire 3-month term), whether or not you've earned the interest yet.

Bottom line

For savers looking at other vehicles to put their cash in rather than a traditional brick-and-mortar, online high-yield savings or big bank high-yield savings account, the three-month BrioDirect High-Rate CD is a good place to start. You earn a higher-than-average interest rate and can easily navigate their website. Once the short three months is over, you can choose to roll your money into another three-month term or withdraw at no cost.

If you want to put your money into a short-term CD but three months is not long enough, try some of CNBC Select's favorites such as the six-month iGObanking High-Yield iGOcd® or the one-year CFG Community Bank CD.

Learn more: 12 key terms everyone with a savings account should know

Our methodology

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: 3-month CD, 6-month CD, 1-year CD, 3-year CD and 5-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.

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the CNBC Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.