CDs (certificates of deposit) are the right place for cash you definitely won't need for a specific period — sacrifice liquidity for a locked rate. In 2026 with the Fed cycle uncertain, the choice between locking a rate via CD vs staying liquid in a HYSA is a real strategic decision. Locked-in CD rates have lost favor when Fed cuts came; right answer depends on what you expect from rates over your term.
Top CDs by term
| Term |
Best CD |
APY |
Min |
| 3-month |
NexBank |
4.65% |
$1k |
| 6-month |
Bask Bank |
4.55% |
$0 |
| 12-month |
Marcus |
4.50% |
$500 |
| 18-month |
Synchrony |
4.40% |
$0 |
| 3-year |
Discover |
4.30% |
$2.5k |
| 5-year |
First Internet Bank |
4.20% |
$1k |
| No-penalty |
Ally |
4.20% |
$0 |
(Top APYs as of April 2026; verify before opening.)
Best overall — Marcus 12-month CD
Goldman Sachs–backed, FDIC insured. 4.50%+ APY consistently top-tier. $500 minimum. Standard early withdrawal penalty (90 days of interest).
When 12-month wins: you have $5k+ that you definitely don't need for a year, and you want certainty over the next year's rate.
Best no-penalty — Ally
If you might need the cash early, Ally's No Penalty CD lets you withdraw any amount after the first 6 days, no fee. Slightly lower APY than locked CDs but real flexibility.
CD ladder strategy
Instead of locking all your money in one CD, ladder them:
- $5k in 1-year CD
- $5k in 2-year CD
- $5k in 3-year CD
- $5k in 4-year CD
When the 1-year matures, roll into a new 4-year. Now you always have $5k coming due each year + better average rate than HYSA.
CDs vs HYSAs in 2026
| Situation |
Pick |
| Definitely won't need cash for X months |
CD (lock the rate) |
| Might need cash, want flexibility |
HYSA |
| Believe Fed will cut rates soon |
CD (lock current rate) |
| Believe Fed will hold or raise |
HYSA (rate floats up) |
We covered HYSAs in depth at Best high-yield savings accounts 2026.
What's NOT worth your money
- CDs from your big-bank checking provider — usually 1–2% lower APY than online competitors
- Brokered CDs with high commission unless yield clearly justifies
- Long-term CDs (5+ year) in low-rate environments — rates may rise, you're locked
- Promotional / "tier" CDs with confusing rate structures
- CDs over the FDIC limit ($250k per bank) — split across institutions
FAQ
Are CDs FDIC-insured?
Yes — up to $250k per depositor per bank.
Are CD interest payments taxed?
Yes — taxed annually as ordinary income (1099-INT) regardless of when paid.
What's the early withdrawal penalty?
Typically 3 months of interest on short CDs, 6 months on longer. Read fine print.
Best for retirement (IRA CDs)?
Worse than equity index funds for retirement timeframes. CDs are short-term safe holdings, not long-term wealth building.
Should I use brokered CDs?
Brokerage CDs (via Fidelity, Schwab) sometimes offer slightly higher rates than direct bank CDs, but liquidity differs. Read terms.
When do CD rates change?
Banks adjust offered rates as Fed funds rate changes. Existing CDs locked at rate at open.
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