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

As of the May 2026 rate snapshot, the best short-term rate is 4.30% APY on 3-month and 6-month CDs from Bread Financial and BMO Alto. For 1-year CDs, the top rate is 4.20% from Bread Financial. Longer terms offer lower rates: 3.90% for 2-year and 3.60% for 5-year CDs. The Federal Reserve held the federal funds rate at 3.50%-3.75% at its June 2026 meeting, so rates have largely stabilized after a year of cuts.

After about a year of cuts, the Federal Reserve has paused: it held the federal funds rate at 3.50%-3.75% at its June 2026 meeting, and its updated projections now point to the rate ending 2026 around 3.75%-4.00%, slightly higher rather than lower. CD rates have largely stabilized after falling roughly 0.25%-0.50% from their mid-2024 peak. Top short-term CDs still out-yield longer terms, so locking in a competitive rate today protects you if rates drift lower, while a no-penalty or laddered CD keeps options open if they 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 CD interest is taxed as ordinary income in the year it is earned, even if the CD has not matured and you have not withdrawn the interest.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.