For example, if a depositor opened a five year CD in year 1 with a yield of 2.05% APY and inflation at 1.5%, then the Value of the certificate of deposit over its five years. If the CD is opened in a low rate environment, and rates and inflation subsequently rise, then inflation will erode the The principle threat to a a five year CD is inflation. If your deposit is over theįDIC limit then you may not receive the uninsured money in case of a bank failure. Like every other CD term, five year CDs from FDIC insured banks are protected up to FDIC limits (generally $250,000 per account holder per bank). In rising rate environments a five-year CD may not be a good investment. Therefore, the temptation for those looking for yield is to open one, deposit money, and forget about it for five years.

The 5-year CD is therefore often the highest offer at your local bank. While banks may offer six-year, seven-year, or even 10-year CDs, the five-year is the longest of the most commonly offered terms. Five-year CDs are the big kahuna of the CD world.

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