What is a CD (Certificate of Deposit)?

A CD is a type of savings account offered by banks and credit unions where you deposit money for a fixed period (the term) at a guaranteed interest rate. Terms typically range from 3 months to 5 years. CDs generally offer higher interest rates than regular savings accounts in exchange for keeping your money locked in for the full term.

What happens if I withdraw money from a CD early?

If you withdraw money before a CD matures, you will typically pay an early withdrawal penalty. The penalty varies by bank and term length but is usually between 3 to 12 months of interest. Some banks offer no-penalty CDs that allow early withdrawals without a fee, though these usually have slightly lower interest rates.

What is a CD ladder and how does it work?

A CD ladder is an investment strategy where you divide your money across multiple CDs with different maturity dates (e.g., 1-year, 2-year, 3-year, 4-year, and 5-year CDs). As each CD matures, you reinvest into a new long-term CD. This gives you regular access to portions of your money while still earning higher long-term rates.

Are CDs FDIC insured?

Yes, CDs at FDIC-member banks are insured up to $250,000 per depositor, per institution. Credit union CDs (called share certificates) are similarly insured by the NCUA for up to $250,000. If you have more than $250,000, you can spread your CDs across multiple institutions to maintain full insurance coverage.

Best CD Rates 2026: Certificate of Deposit Comparison

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CD Strategies

CD Ladder

Split your savings across multiple CD terms (1, 2, 3, 4, 5 years). As each matures, reinvest in a 5-year CD for consistent access to funds while earning top rates.

No-Penalty CDs

Some banks offer CDs with no early withdrawal penalty. You get a slightly lower rate but can access funds anytime.

Bump-Up CDs

These let you increase your rate once if rates rise during your term. Good when you think rates might go up.

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