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Certificates of deposit (CDs) are having a moment. After years of near-zero returns, today’s CDs offer some of the most competitive rates we’ve seen in over a decade — with top yields exceeding 5% APY for certain terms. If you’re looking for a safe, predictable place to grow your savings, CDs deserve a serious look.
We’ve analyzed rates from more than 50 banks and credit unions to bring you the definitive guide to the best CD rates in 2026. Whether you want a short-term 6-month CD or a long-term 5-year lock, this guide has you covered with current rates, strategies, and expert advice for maximizing your returns.
What Is a Certificate of Deposit (CD)?
A CD is a time-deposit savings account offered by banks and credit unions. You deposit a fixed amount for a set period (the “term”), and in exchange, the bank pays a guaranteed interest rate — typically higher than a regular savings account. When the term ends (at “maturity”), you get your original deposit plus the accumulated interest.
The catch? If you withdraw funds before the term ends, you’ll usually pay an early withdrawal penalty — typically several months’ worth of interest. That’s the trade-off: higher rates in exchange for less liquidity.
Best CD Rates of 2026 by Term Length
Best 6-Month CD Rates
| Bank/Credit Union | APY | Minimum Deposit | Early Withdrawal Penalty |
|---|---|---|---|
| Marcus by Goldman Sachs | 5.10% | $500 | 90 days of interest |
| Bread Savings | 5.05% | $1,500 | 90 days of interest |
| Ally Bank | 4.95% | $0 | 60 days of interest |
| Synchrony Bank | 4.90% | $0 | 90 days of interest |
| Discover Bank | 4.85% | $2,500 | 3 months of interest |
Best 1-Year CD Rates
| Bank/Credit Union | APY | Minimum Deposit | Early Withdrawal Penalty |
|---|---|---|---|
| Bread Savings | 5.15% | $1,500 | 6 months of interest |
| Marcus by Goldman Sachs | 5.10% | $500 | 6 months of interest |
| Barclays | 5.00% | $0 | 6 months of interest |
| Capital One | 4.95% | $0 | 3 months of interest |
| Ally Bank | 4.90% | $0 | 60 days of interest |
Best 3-Year CD Rates
| Bank/Credit Union | APY | Minimum Deposit | Early Withdrawal Penalty |
|---|---|---|---|
| Synchrony Bank | 4.50% | $0 | 12 months of interest |
| Marcus by Goldman Sachs | 4.40% | $500 | 9 months of interest |
| Discover Bank | 4.35% | $2,500 | 9 months of interest |
| Ally Bank | 4.25% | $0 | 150 days of interest |
| Barclays | 4.20% | $0 | 12 months of interest |
Best 5-Year CD Rates
| Bank/Credit Union | APY | Minimum Deposit | Early Withdrawal Penalty |
|---|---|---|---|
| Synchrony Bank | 4.30% | $0 | 18 months of interest |
| Marcus by Goldman Sachs | 4.20% | $500 | 12 months of interest |
| Discover Bank | 4.15% | $2,500 | 18 months of interest |
| Ally Bank | 4.00% | $0 | 150 days of interest |
| Capital One | 3.95% | $0 | 6 months of interest |
Pro Tip: CD rates change frequently. The rates above reflect our latest research, but always verify current rates directly with the bank before opening an account. For a comparison with liquid alternatives, see our guide to CDs vs. high-yield savings accounts.
CD Strategies to Maximize Your Returns
The CD Ladder Strategy
A CD ladder is the most popular strategy for balancing high yields with regular access to your funds. Here’s how it works:
- Divide your total CD investment into equal portions (e.g., 5 portions of $10,000).
- Open CDs with staggered terms: 1-year, 2-year, 3-year, 4-year, and 5-year.
- When each CD matures, reinvest it into a new 5-year CD (which typically offers the highest rate).
- After five years, you’ll have a 5-year CD maturing every year — giving you annual access to funds while earning long-term rates.
Example: $50,000 CD Ladder
| Year | Action | Amount | Term | Est. APY |
|---|---|---|---|---|
| Now | Open CD #1 | $10,000 | 1 year | 5.10% |
| Now | Open CD #2 | $10,000 | 2 years | 4.75% |
| Now | Open CD #3 | $10,000 | 3 years | 4.50% |
| Now | Open CD #4 | $10,000 | 4 years | 4.35% |
| Now | Open CD #5 | $10,000 | 5 years | 4.30% |
| Year 2 | CD #1 matures → reinvest in new 5-year CD | $10,510 | 5 years | Current rate |
The Mini-Ladder (Short-Term Focus)
If you think rates may fall in the next 1–2 years and want to lock in today’s high rates with more frequent access:
- Split your funds into 3-month, 6-month, 9-month, and 12-month CDs.
- As each matures, reinvest into a 12-month CD.
- After one year, you’ll have a 12-month CD maturing every quarter.
The Barbell Strategy
Split your CD allocation between short-term (6-month) and long-term (5-year) CDs, skipping the middle. The short-term CDs provide liquidity, while the long-term CDs lock in high rates. This works best when you expect rates to drop significantly — the long-term CDs will outperform as new rates fall.
No-Penalty CDs: The Flexible Alternative
Several banks offer no-penalty CDs that let you withdraw your full balance before maturity without paying a fee. The trade-off is slightly lower rates — typically 0.2–0.5% less than standard CDs of the same term.
| Bank | No-Penalty CD APY | Term | Minimum Deposit |
|---|---|---|---|
| Ally Bank | 4.55% | 11 months | $0 |
| Marcus by Goldman Sachs | 4.45% | 11 months | $500 |
| Capital One | 4.35% | 11 months | $0 |
| Discover Bank | 4.30% | 12 months | $2,500 |
Pro Tip: No-penalty CDs are especially useful when rates are volatile. If rates rise after you open the CD, you can withdraw penalty-free and reinvest at the higher rate. If rates fall, you keep your locked-in rate. It’s a one-way bet in your favor.
CDs vs. Other Savings Options
| Option | Typical APY (2026) | Liquidity | FDIC Insured | Best For |
|---|---|---|---|---|
| Traditional savings | 0.01–0.50% | Instant | Yes | Convenience (not growth) |
| High-yield savings | 4.25–5.00% | Instant | Yes | Emergency fund, short-term savings |
| Money market account | 4.00–4.75% | Instant (with limits) | Yes | Higher balances with check-writing |
| CDs | 4.00–5.15% | Locked (penalty for early withdrawal) | Yes | Known timeline, rate locking |
| Treasury bills/bonds | 4.00–5.00% | Varies | Backed by U.S. government | Tax-advantaged savings |
| I Bonds | Variable (inflation-indexed) | 12-month lock minimum | Backed by U.S. government | Inflation protection |
For a deeper dive into liquid options, see our guides on best high-yield savings accounts and best money market accounts.
When CDs Make Sense (and When They Don’t)
CDs Are Ideal When:
- You have a known savings timeline. Saving for a down payment in 2 years? A 2-year CD locks in today’s rate.
- You expect rates to drop. If the Federal Reserve is cutting rates, locking a 5-year CD at today’s high rate is a smart play.
- You need to protect yourself from yourself. The early withdrawal penalty discourages impulsive spending. If you struggle with saving discipline, CDs can help.
- You want guaranteed, predictable returns. Unlike stocks or bonds, CD returns are fixed and insured by the FDIC up to $250,000 per depositor, per bank.
CDs Are Not Ideal When:
- You might need the money. If there’s any chance you’ll need funds before maturity, use a high-yield savings account instead.
- Rates are rising quickly. If the Fed is actively raising rates, you’ll lock in a lower rate that becomes uncompetitive as new CDs offer higher yields.
- You haven’t built an emergency fund yet. Your emergency fund should be in a liquid account, not locked in a CD.
- You’re investing for long-term growth. Over 10+ year horizons, stocks have historically returned 7–10% annually. CDs at 4–5% can’t match long-term equity returns.
How CD Interest Is Taxed
CD interest is taxed as ordinary income at your federal and state tax rates. Key points:
- Interest is taxable in the year it’s earned, even if you don’t withdraw it until the CD matures.
- Your bank will send a 1099-INT form for any account earning $10+ in interest.
- If you’re in the 22% federal tax bracket and your state tax rate is 5%, a 5.00% CD effectively yields about 3.65% after taxes.
- Consider holding CDs in a tax-advantaged account (IRA CD) to defer or eliminate the tax hit.
FDIC Insurance and CD Safety
CDs at FDIC-insured banks are covered up to $250,000 per depositor, per institution, per ownership category. This means:
- A married couple can insure up to $1 million at a single bank ($250K each individually + $500K in a joint account).
- Spreading CDs across multiple banks increases your coverage.
- Credit union CDs (called “share certificates”) are insured by the NCUA with the same $250,000 limit.
Pro Tip: For large deposits, consider a CDARS (Certificate of Deposit Account Registry Service) or IntraFi network, which automatically spreads your deposit across multiple banks for full FDIC coverage.
How to Open a CD
- Compare rates — Use this guide and check banks directly for current rates.
- Choose your term — Match the CD term to when you’ll need the money.
- Check minimum deposit requirements — Some banks require $0, others require $500–$2,500+.
- Open online — Most banks let you open CDs entirely online in 10–15 minutes.
- Fund your CD — Transfer money from a linked bank account (ACH transfer typically takes 1–3 days).
- Set a maturity reminder — Most CDs auto-renew at maturity. If you don’t want to renew at whatever the bank’s current rate is, set a calendar reminder to withdraw or reinvest before the grace period ends (typically 7–10 days).
Frequently Asked Questions
Are CDs safe?
Yes. CDs at FDIC-insured banks are among the safest investments available. Your principal and interest are guaranteed up to $250,000 per depositor, per bank. You cannot lose money in an FDIC-insured CD.
What happens when my CD matures?
Your bank will notify you before maturity. You typically have a grace period (7–10 days) to withdraw, reinvest, or do nothing. If you do nothing, the CD usually auto-renews at the bank’s current rate for the same term — which may be higher or lower than your original rate.
Can I add money to a CD after opening it?
Standard CDs don’t allow additional deposits. However, some banks offer “add-on CDs” that let you make additional deposits during the term. Ally Bank’s “Raise Your Rate” CD lets you request a rate increase if rates go up.
Is there a best time of year to open a CD?
Not specifically. CD rates are driven by the Federal Reserve’s interest rate decisions, not seasonal patterns. The best time to open a CD is when rates are high and you expect them to decline — which locks in the higher rate for your full term.
Should I choose a bank CD or credit union CD?
Credit unions often offer slightly higher rates than banks because they’re member-owned nonprofits. However, they may have membership requirements (geographic, employer-based, etc.). Both are equally safe — bank CDs have FDIC insurance, credit union CDs have NCUA insurance. Compare rates from both.
What’s the penalty for breaking a CD early?
Early withdrawal penalties vary by bank and term length. Typical penalties range from 60 days of interest (short-term CDs) to 18 months of interest (5-year CDs). In some cases, penalties can eat into your principal if you withdraw very early. Always check the penalty before opening a CD.
Specialty CDs Worth Considering
Beyond standard CDs, several specialty options offer unique advantages:
Bump-Up CDs
Bump-up CDs let you request a one-time rate increase if rates rise during your term. You keep your existing CD but lock in the new, higher rate for the remaining term. Ally Bank’s Raise Your Rate CD is the most popular option, available in 2-year and 4-year terms. The starting rate is slightly below standard CDs, but the flexibility can pay off in a rising rate environment.
Step-Up CDs
Step-up CDs automatically increase your rate at predetermined intervals throughout the term. For example, a 28-month step-up CD might start at 4.0%, increase to 4.5% after 7 months, then to 5.0% after 14 months, and to 5.5% for the final 7 months. These are appealing in flat or rising rate environments, but the blended average rate may be lower than a standard CD if rates don’t actually rise.
Jumbo CDs
Jumbo CDs require higher minimum deposits (typically $100,000+) and pay slightly higher rates in return. The premium is usually 0.05–0.25% above standard CDs. If you have substantial savings, the extra yield adds up: on $250,000, an additional 0.20% means $500 more per year. However, be mindful of FDIC limits — only $250,000 per depositor per bank is insured.
IRA CDs
IRA CDs combine the safety of CDs with the tax advantages of Individual Retirement Accounts. Your interest grows tax-deferred (Traditional IRA) or tax-free (Roth IRA). They’re an excellent option for conservative investors near retirement who want guaranteed returns without market risk. Most banks that offer regular CDs also offer IRA CDs at the same or similar rates.
Brokered CDs
Available through brokerage accounts (Fidelity, Schwab, Vanguard), brokered CDs offer several advantages: you can shop rates from many banks in one place, you can sell before maturity on the secondary market (though at market value, which may be more or less than face value), and they simplify CD laddering across multiple banks. The trade-off is less predictability if you need to sell early.
The Bottom Line
With top rates exceeding 5% APY, 2026 is an excellent time to add CDs to your savings strategy. The key is matching your CD terms to your actual savings timeline, using strategies like laddering to balance yield with flexibility, and shopping aggressively — the difference between the best and average CD rates can be 0.5–1.0% APY, which adds up significantly over time.
CDs aren’t a replacement for your emergency fund (keep that in a high-yield savings account) or your retirement investments (stocks still win over decades). But for money you know you won’t need for a specific period, a CD offers guaranteed, risk-free returns that beat inflation — and in this rate environment, that’s a deal worth locking in.