Research Methodology
GOBankingRates looked at the following factors for all banks (except neobanks) to determine the rankings: (1) total assets received from the FDIC; (2) the number of branch locations received from the FDIC; (3) Minimum deposit amount to open an account; (4) 12-month CD APY rate; (5) 60-month CD APY rate, and (6) average mobile app rating between Google Play (Android) and Apple Store. All factors were then scored and combined, with the lowest score being the best. Factors (1) and (2) were weighed 0.5 times, factor (3) 2 times, and factors (4) and (5) 4 times. All data is updated as of January 22, 2026, rates and fees are subject to change. All other information on the accounts is accurate as of April 13, 2026.
How to choose a CD account
When opening the CD, you will select the word. This is the period you are committed to keeping your funds in the account. Typical CD terms range from three months to five years.
Here are some points to keep in mind:
- access: You can’t access the money in your CD until maturity without incurring an early withdrawal penalty.
- Duration: When opening a CD, you’ll choose a certain length of time – usually from three months to several years – and the money will be locked in for that period.
- APY: CD rates depend on the term you choose. In some cases, shorter-term CDs offer higher yields than longer-term CDs.
Before opening a CD account, there are a few things you should consider. You can follow these steps to choose the best CD for you.
Step 1: Make Sure You Understand How CDs Work
CDs are a type of savings account offered by banks and credit unions. It provides a safe and easy way to invest and get returns on your money. However, unlike traditional savings, this is not a liquid account from which you can easily withdraw money.
To earn the highest CD rate, you must leave your CD account untouched for the entire period until it reaches maturity.
Step 2: Keep fees and minimum amounts in mind
Although most CDs don’t charge a monthly fee, you may face penalties for early withdrawals. Additionally, CDs often have minimum deposit requirements, so make sure the amount fits your budget.
If you’re looking for the banks with the highest CD rates, be sure to compare both the APY and minimum deposit requirements.
Step 3: Find out if a CD is right for you
CDs are best for people who want a low-risk way to save and earn more interest. If you don’t need access to the funds during the period, a CD can be a smart way to accomplish your goals.
Step 4: Open a CD Account
Once you’ve selected the right account for you, you can follow these steps to open an account:
- Make sure you have two forms of identification, such as your driver’s license or passport.
- Submit personal information and required documents, such as your name, address, birthday and Social Security number.
- Decide whether you want to pay the interest at the end of the term or regularly.
- Fund the account with your initial deposit.
Advantages and disadvantages of CD
CDs have many advantages, but also some disadvantages. Here are some pros and cons to consider.
Pros
- Higher Interest Rates: CDs generally offer higher rates than traditional savings accounts. Depending on the length of the CD you choose, the APY can be 4% or higher.
- Encourages Savings: Because the money in a CD can’t be withdrawn until the term ends, it keeps you from spending and helps you stay on track with your savings goals.
- Guaranteed Rates: If you open your account when interest rates are high, you can lock in that rate for the entire term – even if rates later fall.
Shortcoming
- No access to funds: Your money is locked for the entire period. Early withdrawal often means a penalty.
- Rates are locked in: If interest rates rise after you open your CD, you may not be able to take advantage of those higher rates.
- Opportunity Cost: CDs are safer than stocks or other investments, but your money can potentially earn somewhere else, especially over the long term.
What are CDs best for? People who want secure, predictable returns on their money and do not need immediate access to their funds.
types of cd
There are several types of CDs, each with their own benefits and terms:
- Traditional CD: Deposit a fixed amount which remains locked for a predetermined period of time. This option usually offers the highest interest rates but requires you to leave your funds untouched until maturity.
- No Fines CD: Also known as a Liquid CD, this option allows penalty-free withdrawals before the CD matures. Financial institutions may set waiting periods or withdrawal limits, and interest rates are usually lower than traditional CDs.
- Bump-up CD: Gives you the flexibility to request a higher interest rate if rates rise during your term. It offers flexibility but often starts with a slightly lower starting rate.
- Add-on CD: Allows you to make additional deposits after opening a CD, which can help you grow your balance without opening multiple accounts.
- Jumbo CD: Designed for larger deposits, typically $100,000 or more, with higher rates to reward larger balances.
Alternatives to CD Accounts
Here are some alternatives to CDs and how they stack up:
| Account | access to funds | interest rates | best for |
|---|---|---|---|
| CD | Locked till expiry of period, penalty on early withdrawal | Higher, fixed for period | Saving for a specific goal |
| traditional savings accounts | full access at any time | Less | everyday savings |
| High-Yield Savings Accounts | full access at any time | More than traditional savings, variable | emergency fund |
| money market accounts | Limited withdrawal, check-writing or debit access | medium, sometimes level | savings with some liquidity |
| bond | Locked up until maturity or salable | varies, often moderate | Long-term, low-risk investing |
CD vs. Traditional Savings Accounts
Savings accounts let you withdraw funds at any time, while CDs lock your money for a set period of time and charge penalties for early withdrawals. CDs usually earn more interest, so they’re better if you don’t need immediate access.
CDs vs. High-Yield Savings Accounts
High-yield savings accounts allow account holders to earn significant interest on their balances. Many people use these accounts for emergency funds. CDs are better if you’re saving for a big purchase because you can’t use your money until the term ends.
CD vs Money Market Accounts
Money market accounts have checking account features, such as the ability to write checks or link a debit card. A CD is a time-deposit account, and not a money market account, so it generally pays less than a CD.
cd vs bond
Both CDs and bonds are considered safe investments. They both offer higher returns than a standard savings account. However, when interest rates are high, CDs may be a better option. This works the opposite for bonds, which fare better when interest rates are low.
CD and taxes
Whenever you earn money, you should always be aware of the tax implications.
Are you taxed when a CD matures?
For CDs with a term of 12 months or less, the interest is taxable at maturity. This can help in deferring taxable income to the next year. For CDs longer than 12 months, the interest is usually taxed as it accrues each year, even if it is not deposited into your account until the CD matures.
Are CDs taxed at the end of the term?
Yes. The IRS considers CD interest as taxable income. If you earn more than $10 in interest, you will receive Form 1099-INT for tax reporting.
Does cashing out a CD count as income?
Only the interest portion of your CD is taxable income – not your original principal. If you withdraw funds early and pay a penalty, the IRS may allow you to deduct the penalty amount from your taxable income.
Best CD Rates FAQ
- Which banks offer the best CD rates right now?
- As of April 13, 2026, the strongest widely published bank CD rates in this roundup are coming from E*Trade and Marcus. E*TRADE is showing advertised rates up to 4.10% APY, while Marcus is showing up to 4.05% APY.
- What’s a good CD rate right now?
- A good CD rate right now is typically 4.00% APY or higher, depending on the term. In this roundup, the strongest widely published bank rates are clustered around 4.00% to 4.10% APY.
- Is it better to put money in a CD or money market account?
- It depends on the goal. A CD is generally more useful for readers who want a fixed return and do not need the money before maturity, while a money market account may be better for those who want easy access to cash.
- What is the typical minimum deposit amount for a CD?
- The minimum deposit amount varies by institution. Some of the banks in this roundup still offer CDs with no minimum deposits, while others require $500 or $1,500 to open and earn the so-called APY.
- How does the early withdrawal penalty work for CDs?
- If money is withdrawn before the CD matures, the bank will usually charge an early withdrawal penalty. The exact penalty depends on the bank and the length of the term, and longer CDs often have higher penalties.
More Resources for Banking
best money market accounts
*Capital One interest rates are accurate as of 4/13/2026. Check the website for all current rates.
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