Certificates of deposit
A locked rate — if you can leave it alone.
A CD trades access for certainty: park a lump sum for a set term, and the bank locks in a fixed rate that can't drop while a savings rate can. That's genuinely useful for money with a known deadline — and a bad fit for money you might need sooner. The whole decision lives in one number most people skim past: the early-withdrawal penalty.
Anchor on the average, then judge the offer
CD rates swing with what the market expects the Fed to do, so start from the national average and read any specific offer against it. The best online CDs usually clear these averages by a wide margin — but a fixed rate is only worth locking if it beats what you can get elsewhere for the same money.
National average deposit rates shown as of June 15, 2026, source FDIC National Rates and Rate Caps. These are national averages, not offers. Individual bank rates change constantly, are set by the bank, and are almost always higher or lower than the average — always confirm the current rate and terms with the provider before you decide. Notice the shape: when short and long CDs pay almost the same, there's little reward for locking up longer — that's a real signal to keep the term short.
Four things to look at — in this order
A CD is a simple product with one sharp edge. Run every offer through these before you commit the money.
The term — how long you're locked in
This is the promise you're making: you won't touch the money until it matures. Match the term to a real timeline — a down payment 18 months out, a tax bill next spring. A longer term usually pays more, but only if you can genuinely leave it alone. Don't reach for a 5-year rate on money you might need in one.
The fixed APY — and whether long really pays more
The whole appeal of a CD is a rate that can't drop for the term. Compare the fixed APY against what a variable savings account pays today — and against longer and shorter CDs. Sometimes the curve is flat or inverted, and a longer lock-up barely pays more than a short one. If it doesn't pay you meaningfully more to commit longer, don't commit longer.
The early-withdrawal penalty — the number that matters most
This is the catch, spelled out. Break the CD early and you forfeit a chunk of interest — often several months' worth, and on a short CD that can dip into your principal. Read the exact penalty before you sign, not after. It's the difference between a CD being a smart lock and an expensive trap.
Minimums, and what happens at maturity
Check the minimum to open. Then check the maturity terms: many CDs auto-renew into a new term at whatever rate is current unless you act within a short grace window — which can quietly relock your money at a worse rate. Know the maturity date and set a reminder, so renewal is your choice, not the bank's default.
A useful move
The CD ladder, in one paragraph
If you like the locked rate but hate being fully locked, split the money across CDs with staggered terms instead of one big one — some short, some medium, some long. As each rung matures, a chunk of cash frees up, and you either spend it or roll it into a new long CD at whatever rates are then. You keep regular access to part of your money and still capture the longer-term rates on the rest. It's the standard answer to "I don't want it all trapped."
The tradeoff, up front
A CD gives you a rate that can't fall and takes away your easy access to the cash. High-yield savings does the opposite — full access, but a rate that can drop tomorrow. So the real question isn't which pays more today; it's whether you'd rather lock certainty or keep flexibility for this particular pile of money. Emergency fund? Savings. Money with a fixed date you won't touch till then? A CD can be the better home.
Frequently asked
What is a CD, in plain English?
A certificate of deposit is a deal: you agree to leave a lump sum untouched for a set term — a few months to a few years — and in return the bank locks in a fixed rate for the whole term. As of June 15, 2026, the FDIC national average was 1.65% APY on a 12-month CD and 1.35% APY on a 60-month CD, and the best online CDs typically pay well above those averages.
What's the catch with a CD?
Access. Your money is locked for the term, and taking it out early triggers an early-withdrawal penalty — usually a set number of months of interest, which on a short CD can eat into your principal. That penalty is the single most important number on the page. A CD only makes sense for money you're confident you won't need until it matures.
What is a CD ladder?
Instead of putting one lump sum in one CD, you split it across several with staggered terms — say some in a 1-year, some in a 2-year, some in a 3-year. As each one matures you get a chunk of cash back (or roll it into a new long CD). A ladder gives you regular access to part of your money while still capturing the higher long-term rates, so you're not fully locked up.
Are CDs FDIC-insured?
A CD from an FDIC-insured bank is protected up to the coverage limit, just like savings — the insurance comes from the FDIC through the bank, not from ClearValue Banking. A credit union CD (sometimes called a share certificate) is covered by the NCUA instead. Either way, confirm the institution is insured before you commit the money.