What Is a CD (Certificate of Deposit)? Rates and How They Work (2026)

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).

Current CD Rates (March 2026)

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

CD vs. High-Yield Savings Account

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.

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.