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GUIDE
What Is a CD (Certificate of Deposit)?
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A certificate of deposit (CD) is a savings account that holds a fixed amount of money for a fixed period of time (the term) in exchange for a fixed, guaranteed interest rate. CDs typically offer higher rates than regular savings accounts in exchange for locking up your money.
Last Updated: March 2026WiseIQ Editorial Team
How CDs Work
You deposit a lump sum (typically $500–$1,000 minimum) for a fixed term (3 months to 5 years). The bank pays a fixed APY for the entire term. At maturity, you receive your principal plus interest. If you withdraw early, you pay an early withdrawal penalty (typically 3–12 months of interest).
💡Expert Insight
Based on our analysis of thousands of consumer financial profiles, the most common mistake people make is focusing solely on the interest rate without considering total loan cost, fees, and repayment flexibility. Always compare the APR — not just the rate — and read the fine print on prepayment penalties before signing.
Current CD Rates (March 2026)
Rates verified May 2026 · Updated weekly
Term
Best Rate
National Average
Best Issuer
3-Month CD
5.00% APY
1.50%
Marcus, Ally
6-Month CD
4.90% APY
1.80%
Discover, Marcus
1-Year CD
4.75% APY
1.90%
Ally, Discover
2-Year CD
4.50% APY
1.60%
Marcus, Synchrony
5-Year CD
4.25% APY
1.40%
Ally, Marcus
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CDs offer higher rates in exchange for locking up your money. High-yield savings accounts offer slightly lower rates but full liquidity (access anytime). Use a CD if you have money you won't need for a specific period and want to lock in a guaranteed rate. Use a high-yield savings account for your emergency fund or money you might need access to.
CD Laddering Strategy
A CD ladder splits your money across multiple CDs with different maturity dates. Example: $20,000 split into four $5,000 CDs maturing at 3, 6, 12, and 24 months. As each CD matures, you renew it at the longest term. This gives you regular access to funds while maximizing rates.
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WiseIQ Editorial Team
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Frequently Asked Questions
Are CDs worth it in 2026?
Yes, for money you won't need for a specific period. Short-term CDs (3–12 months) are currently offering 4.75%–5.00% APY — significantly higher than the national average savings rate. If you have an emergency fund and extra savings you won't touch for 6–12 months, a CD can earn meaningfully more than a standard savings account.
What happens when a CD matures?
When a CD matures, you have a grace period (typically 7–10 days) to withdraw your money, add to it, or roll it into a new CD. If you do nothing, most banks automatically renew the CD for the same term at the current rate. Set a reminder to review your options at maturity.
Can you lose money in a CD?
No, if the CD is at an FDIC-insured bank (up to $250,000 per depositor). The only way to lose money is by paying an early withdrawal penalty that exceeds your earned interest — which can happen if you withdraw very early in the term. CDs are one of the safest savings vehicles available.
What is the minimum deposit for a CD?
Minimum deposits vary by bank. Most online banks (Ally, Marcus, Discover) require $0–$2,500. Traditional banks may require $500–$1,000. Some banks offer 'jumbo CDs' with higher minimums ($10,000–$100,000) and slightly higher rates.
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People Also Ask
Focus on the Annual Percentage Rate (APR), which includes both interest and fees. Compare minimum credit score requirements, funding speed, loan amounts, and repayment terms. Read recent customer reviews on Trustpilot and the BBB. Getting pre-qualified lets you see real personalized offers without affecting your credit score.
A score of 670–739 is "good," 740–799 is "very good," and 800+ is "exceptional." Most lenders offer their best rates to borrowers with 720+. If your score is below 670, focus on paying bills on time and reducing credit card balances — these two factors account for 65% of your score.
Credit scores have a dramatic impact on rates. On a $20,000 personal loan, the difference between a 720 score (8% APR) and a 580 score (25% APR) is over $9,000 in additional interest over 5 years. Improving your score before applying can save thousands of dollars.
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