CD Rates & Terms
Current certificate of deposit rates by term length, early withdrawal penalties by bank, and CD ladder strategies to maximize returns while maintaining access
Key Numbers
Top Rates
4.0–4.2% APY
Terms
3 Mo – 5+ Yrs
Penalties
3–12 Mo Interest
FDIC Insured
$250,000
A certificate of deposit (CD) pays a fixed interest rate for a set term in exchange for locking up your deposit. You typically earn more than a regular savings account, but withdrawing early triggers a penalty. CDs are FDIC-insured up to $250,000 per depositor, per institution.
How CDs Work
Choose Term & Deposit: Select a term (3 months to 5+ years) and make your deposit. Most CDs require $500–$2,500 minimum; some online banks have no minimum.
Lock In Your Rate: Your APY is fixed for the entire term — it won't change even if market rates drop (or rise).
Earn Interest: Interest typically compounds daily and can be paid monthly, quarterly, or at maturity.
Maturity: At maturity, withdraw principal + interest or roll into a new CD. Most banks auto-renew at the current rate if you don't act within the 7–10 day grace period.
Types of CDs
| Type | Rate Trade-off | Key Feature |
|---|---|---|
| Traditional | Highest rates | Fixed rate, fixed term; early withdrawal penalty applies |
| No-Penalty | 0.25–0.75% lower | Withdraw after 7 days without forfeiting interest |
| Bump-Up | Starts lower | Request one rate increase if bank's offered rate rises |
| Jumbo | Sometimes higher | Requires $100,000+ deposit |
CDs vs. High-Yield Savings
| Feature | CDs | High-Yield Savings |
|---|---|---|
| Interest Rate | Fixed for term | Variable — can change anytime |
| Top Rates (Feb 2026) | 3.5–4.2% APY | 4.0–5.0% APY |
| Liquidity | Locked until maturity | Withdraw anytime |
| Early Withdrawal | Penalty (3–12 mo interest) | No penalty |
| Use Case | Money you won't need; locking in rates | Emergency fund; flexible savings |
Rate environment (Feb 2026): After six Fed rate cuts since September 2024 (current federal funds rate: 3.50–3.75%), CD rates have fallen from 5%+ peaks. HYSAs currently match or beat short-term CDs — CDs are most valuable now for locking in rates before further potential declines.
Current Rates by Term
Top CD rates range from 3.5% to 4.2% APY depending on term and institution. Short-term CDs currently pay similar or slightly higher rates than long-term CDs — an inverted yield curve reflecting expectations of further rate cuts.
Top Rates by Term
| Term | Top Rate | Nat'l Avg | Top Banks |
|---|---|---|---|
| 3 months | 4.18% | 1.22% | Citibank, Northern Bank Direct |
| 6 months | 4.15% | 1.58% | Northern Bank Direct |
| 1 year | 4.00% | 1.90% | Marcus, First National |
| 18 months | 4.00% | 1.42% | Marcus, Popular Direct, Bread |
| 2 years | 4.05% | 1.32% | America First CU, First National |
| 3 years | 4.10% | 1.33% | United Fidelity Bank, TAB Bank |
| 5 years | 4.15% | 1.34% | United Fidelity Bank, First National |
Rates as of February 2026. National averages from FDIC/Bankrate. Citibank rates may vary by location. Always verify current rates directly with the institution before opening.
Earnings on a $10,000 Deposit
| Term | APY | Interest Earned | Total at Maturity |
|---|---|---|---|
| 6 months | 4.15% | ~$207 | $10,207 |
| 1 year | 4.00% | ~$400 | $10,400 |
| 2 years | 4.05% | ~$826 | $10,826 |
| 5 years | 4.15% | ~$2,266 | $12,266 |
Assumes interest compounded daily at top available rates. Actual earnings may vary.
Online vs. brick-and-mortar: Online banks typically offer APYs 2–3× the national average due to lower overhead costs. The gap between top rates and national averages reflects this difference.
Early Withdrawal Penalties
Withdrawing before maturity triggers a penalty — typically several months' worth of interest. Federal law requires a minimum 7 days' interest penalty for withdrawals within 6 days of deposit.
Typical Penalties by Term
| CD Term | Typical Penalty | Example ($10k @ 4%) |
|---|---|---|
| Less than 3 months | 1 month's interest | ~$33 |
| 3–12 months | 3 months' interest | ~$100 |
| 12–24 months | 6 months' interest | ~$200 |
| Over 24 months | 12 months' interest | ~$400 |
| 5+ years (some banks) | 18+ months' interest | ~$600+ |
Penalties by Bank (Days of Interest)
| Bank | <1 Year | 1–2 Years | 2+ Years |
|---|---|---|---|
| Ally Bank | 60 days | 60 days | 150 days |
| Marcus | 90 days | 270 days | 365 days |
| Synchrony | 90 days | 180 days | 365 days |
| Wells Fargo | 90 days | 180 days | 365 days |
| E*TRADE | 90 days | 365 days | 540 days |
When Breaking a CD Early Makes Sense
May Be Worth It
Avoiding high-interest debt (20%+ APR), genuine emergency with no other liquid savings, locking in a significantly higher rate elsewhere, or making a down payment that eliminates PMI
Probably Not Worth It
Discretionary spending, chasing a small rate improvement (<0.5%), close to maturity anyway, or you have other liquid savings available
Tax benefit: CD early withdrawal penalties are tax-deductible as an adjustment to income (above-the-line), even if you don't itemize. Report on Schedule 1, Line 18.
CD Strategies
Matching your CD strategy to your timeline and liquidity needs can maximize returns while keeping funds accessible when you need them.
| Your Situation | Approach | Why |
|---|---|---|
| Need flexibility, expect rates to fall | No-penalty CD | Lock current rate, withdraw if needed |
| Won't need money until a specific date | Single CD matching timeline | Highest rate, simplest approach |
| Want regular access + competitive rates | CD ladder | Balance of liquidity and yield |
| Uncertain timeline, may need funds | HYSA instead | Similar rates with full liquidity |
| $100k+ to save | Ladder across banks | Stay under $250k FDIC limit per bank |
CD Ladder Example ($10,000)
A CD ladder spreads deposits across staggered maturity dates, providing regular access to funds while capturing longer-term rates. As each rung matures, reinvest into a new 5-year CD to maintain the cycle.
| Rung | Term | Amount | Matures | Then |
|---|---|---|---|---|
| 1 | 1 year | $2,000 | Feb 2027 | → Reinvest in 5-year CD |
| 2 | 2 years | $2,000 | Feb 2028 | → Reinvest in 5-year CD |
| 3 | 3 years | $2,000 | Feb 2029 | → Reinvest in 5-year CD |
| 4 | 4 years | $2,000 | Feb 2030 | → Reinvest in 5-year CD |
| 5 | 5 years | $2,000 | Feb 2031 | → Reinvest in 5-year CD |
After Year 1, one CD matures annually. A mini ladder (3, 6, 9, 12 months with $2,500 each) works similarly but provides quarterly access — useful if you may need funds sooner.
Don't forget maturity: Most CDs auto-renew — often at a lower rate. Set calendar reminders 1–2 weeks before maturity. You typically have a 7–10 day grace period to withdraw or redirect without penalty.
This content is for educational and informational purposes only and does not constitute financial, tax, or legal advice. Consult a qualified professional for guidance tailored to your situation.