Best CD Rates Compared: Every Term From 3 Months to 5 Years

As of the May 2026 rate snapshot on this page, the best short-term rate was 4.30% APY on 3-month and 6-month CDs from Bread Financial and BMO Alto, with 4.20% on 1-year CDs. Longer terms sat lower: 3.90% for 2-year and 3.60% for 5-year. Since then the Federal Reserve held the federal funds rate at 3.50%-3.75% again at its 29 July 2026 meeting, but on a 9-3 vote with three officials dissenting in favor of a rate hike, so verify the current APY with each bank before opening a CD.

The Federal Reserve has paused after about a year of cuts: it held the federal funds rate at 3.50%-3.75% at both its June and 29 July 2026 meetings. The July decision came on a 9-3 vote, with three officials preferring a 25 basis point hike, so the near-term risk now leans toward rates holding or rising rather than falling. The June projections, still the most recent (no new set was issued in July; the next comes at the September meeting), point to the rate ending 2026 around 3.75%-4.00%. Top short-term CDs still out-yield longer terms, so a competitive locked rate protects you either way, while a no-penalty or laddered CD keeps options open if rates rise.

Yes. CDs at FDIC-insured banks are protected up to $250,000 per depositor, per bank. This means your principal and earned interest are guaranteed even if the bank fails. For deposits exceeding $250,000, spread across multiple banks for full coverage or use brokered CDs through Fidelity or Schwab which automatically diversify across issuing banks.

Yes. CD interest is taxed as ordinary income in the year it is earned, even if the CD has not matured and you have not withdrawn the interest. Your bank sends a 1099-INT form each year. For CDs held in tax-advantaged accounts like Traditional or Roth IRAs, the tax treatment depends on the account type: Traditional IRA CDs are tax-deferred, while Roth IRA CDs grow tax-free.

A CD ladder splits your deposit across multiple terms, for example 1-year, 2-year, and 3-year CDs. As each CD matures, you reinvest at the current rate or use the funds. This balances rate-locking with liquidity. Laddering is ideal when you want to lock in today's rates but also want access to some money at regular intervals.

Bank CDs are opened directly with a bank like Ally or Discover. Brokered CDs are purchased through a brokerage like Fidelity, Schwab, or Vanguard from various issuing banks. Brokered CDs are tradeable on the secondary market and can automatically spread FDIC coverage across multiple banks. However, they typically pay simple interest rather than compound interest.

Many online banks like Ally, BMO Alto, Synchrony, and Capital One require no minimum deposit. Others require $500 (Marcus), $1,000 (CIT Bank), $1,500 (Bread Financial), or $2,500 (Discover). Jumbo CDs typically require $100,000 or more.

Opening a CD takes 10-15 minutes online. Choose a bank, select your term and deposit amount, fund from an existing bank account via ACH transfer, and your CD begins earning interest once funded. Most banks allow you to open CDs entirely online with no branch visit required.