The best CD rates in May 2026 reach 4.20% APY — a level that is significantly above the 0.01%–0.50% you earn at most traditional bank savings accounts, and competitive with or better than most high-yield savings accounts. With the Federal Reserve holding its benchmark rate steady at 3.50%–3.75%, these rates are unlikely to rise meaningfully in the near term — and may decline if the Fed cuts rates at upcoming meetings.
For savers with money they don’t need immediate access to, locking in a competitive CD rate now is a sound financial decision. A $25,000 one-year CD at 4.00% APY earns $1,000 in guaranteed, risk-free interest over 12 months — more than many people earn in their regular savings account in a decade.
This guide ranks the best CDs across every major term length, explains the CD ladder strategy, covers specialty CD types, and gives you a clear decision framework for choosing the right option in 2026.
Disclaimer: CD rates are subject to change at any time. All rates verified as of May 12–15, 2026. Always confirm current rates directly with the institution before opening an account. All accounts listed are FDIC or NCUA insured unless otherwise noted.
Table of Contents
- What Is a Certificate of Deposit (CD)?
- CD Rates in 2026: The Current Environment
- Best CD Rates by Term Length (May 2026)
- Best Short-Term CDs (3–6 Months)
- Best 1-Year CDs — The Sweet Spot
- Best 2–3 Year CDs
- Best 5-Year CDs
- Best No-Penalty CDs
- The CD Ladder Strategy: Lock In High Rates and Stay Liquid
- CD vs High-Yield Savings Account: Which Is Better in 2026?
- How to Open a CD: Step by Step
- Which CD Is Right for You?
- Frequently Asked Questions
1. What Is a Certificate of Deposit (CD)?
A certificate of deposit is a type of savings account that offers a fixed interest rate in exchange for leaving your money untouched for a set period of time — called the term. Terms typically range from 1 month to 10 years. When the term ends (the CD “matures”), you receive your original deposit plus all accumulated interest.
The core trade-off: CDs typically pay higher rates than savings accounts, but if you need your money before the term ends, you will pay an early withdrawal penalty — usually 3 to 12 months of interest, depending on the institution and term length. Some CDs (called “no-penalty CDs”) allow early withdrawal without a fee, but typically offer slightly lower rates.
Like savings accounts, CDs at FDIC-member banks are insured up to $250,000 per depositor — your principal is completely safe from bank failure. CDs at credit unions carry equivalent NCUA insurance.
2. CD Rates in 2026: The Current Environment
The Federal Reserve cut its benchmark federal funds rate three times in 2025, and most banks responded by gradually reducing CD and savings rates. The Fed then held rates steady at 3.50%–3.75% at its April 29, 2026 meeting, with the next policy decision scheduled for June 16–17, 2026.
The result: CD rates in May 2026 are lower than the 5.00%+ peaks of 2023–2024, but remain historically attractive — significantly higher than the near-zero rates of 2010–2021.
| CD Term | National Average APY | Best Available APY (May 2026) | Difference |
|---|---|---|---|
| 3 months | ~1.50% | 4.00% | +2.50 percentage points |
| 6 months | ~1.80% | 4.20% | +2.40 percentage points |
| 1 year | ~1.90% | 4.20% | +2.30 percentage points |
| 2 years | ~1.60% | 4.10% | +2.50 percentage points |
| 5 years | ~1.45% | 4.20% | +2.75 percentage points |
Key insight for May 2026: In the current rate environment, short-term CDs (6–12 months) offer the best combination of competitive yields and near-term liquidity. Because the Fed may cut rates later in 2026, locking in current rates via a CD makes sense for money you won’t need for 6–18 months. For longer terms (3–5 years), carefully consider whether locking in today’s rate is worth the reduced flexibility if rates change significantly.
3. Best CD Rates by Term Length — Master Table (May 2026)
| Term | Best Institution | APY | Min. Deposit | Early Withdrawal Penalty |
|---|---|---|---|---|
| 3 months | Northern Bank Direct | 4.00% | $500 | 90 days interest |
| 6 months | Newtek Bank | 4.00% | $2,500 | 180 days interest |
| 9 months | Newtek Bank / E*TRADE | 4.10%–4.20% | $2,500 / $0 | Varies |
| 1 year | Marcus by Goldman Sachs | 3.90% | $500 | 270 days interest |
| 18 months | Bread Savings | ~4.05% | $1,500 | 365 days interest |
| 2 years | First National Bank of America | ~4.00% | $1,000 | 365 days interest |
| 3 years | LendingClub Bank | ~3.80% | $500 | 270 days interest |
| 5 years | First National Bank of America | ~4.20% | $1,000 | 730 days interest |
| No-penalty (11 months) | Ally Bank | ~3.60% | $0 | None — withdraw anytime after 6 days |
APYs as of May 12–15, 2026. Rates are subject to change. Verify directly with institution before opening.
4. Best Short-Term CDs: 3–6 Months
Short-term CDs are ideal for money you will need within the next 3–6 months but want to put to work earning more than a standard savings account in the meantime. They are also a smart hedge in an uncertain rate environment: by keeping your term short, you retain the flexibility to roll into a higher-rate product if rates rise.
Northern Bank Direct — Best 3-Month CD
–APY: 4.00%
–Minimum deposit: $500
–Early withdrawal penalty: 90 days of interest
–FDIC insured: Yes
Northern Bank Direct’s 3-month CD offers a strong 4.00% APY with a low $500 minimum — an accessible entry point for savers who want to earn a competitive rate on money they need back relatively soon. At $500 minimum, a $10,000 deposit earns approximately $98 over 3 months.
Newtek Bank — Best 6-Month CD
–APY: 4.00%
–Minimum deposit: $2,500
–Early withdrawal penalty: 180 days of interest
–FDIC insured: Yes
Newtek Bank consistently ranks among the highest-yielding CD providers across multiple terms in 2026. The $2,500 minimum is higher than some competitors but not prohibitive, and the 4.00% APY on the 6-month term is competitive with most high-yield savings accounts while locking in the rate for 6 months regardless of what the Fed does in that period.
5. Best 1-Year CDs — The Sweet Spot of 2026
The 1-year CD is the most popular term in 2026 for good reason: it offers a competitive fixed rate, a predictable maturity date that is close enough to plan around, and protection against rate cuts that may occur in the second half of 2026. Most financial analysts recommend the 1-year as the default CD choice in the current rate environment.
Marcus by Goldman Sachs — Best 1-Year CD Overall
–APY: 3.90% (as of May 6, 2026)
–Minimum deposit: $500
–Early withdrawal penalty: 270 days of interest
–Rate guarantee: Fund within 10 days of application to lock in the advertised rate
–FDIC insured: Yes
Marcus by Goldman Sachs offers a compelling 1-year CD with a low $500 minimum, a competitive 3.90% APY, and the institutional reliability of Goldman Sachs behind it. The 10-day funding guarantee ensures you lock in the advertised rate even if it changes during the application process — a meaningful consumer protection.
Bread Savings — Best 1-Year CD for Rate Range
–APY: Competitive across 3-month to 5-year terms
–Minimum deposit: $1,500
–FDIC insured: Yes
Bread Savings has consistently delivered strong rates across its entire CD lineup — making it particularly valuable for savers building a CD ladder who want a single institution covering multiple terms. The $1,500 minimum is higher than Marcus or E*TRADE, but rates across the 1-year and 18-month terms are reliably competitive.
E*TRADE (Morgan Stanley) — Best 1-Year CD for $0 Minimum
–APY: Competitive (varies by term)
–Minimum deposit: $0
–FDIC insured: Yes (via Morgan Stanley Private Bank)
E*TRADE’s CD lineup stands out for its $0 minimum deposit requirement — one of the lowest barriers to entry of any competitive CD provider — combined with solid rates across the 6-month to 5-year range. The 10-day rate guarantee mirrors Marcus’s consumer-friendly funding window. The primary drawback is that early withdrawal penalties, which can reach 15 months of interest on longer terms, are on the steeper end of the market.
6. Best 2–3 Year CDs
Mid-term CDs make sense when you want to lock in a rate for longer than a year but are not comfortable committing to 5 years. In 2026’s rate environment, mid-term CDs offer a modest rate premium over 1-year CDs — check current spreads carefully, as the difference may not justify the additional 1–2 years of reduced liquidity.
First National Bank of America — Best 2-Year CD
–APY: ~4.00%
–Minimum deposit: $1,000
–Term options: 3 months to 10 years — widest range of any institution on this list
–FDIC insured: Yes
First National Bank of America is a Michigan-based bank that offers its CDs nationwide online. It stands out for its exceptional range of term options — from 3 months to 10 years — making it the most flexible single institution for savers building multi-term strategies. Rates are solid across all terms, with no need to shop multiple banks to cover your full CD ladder.
LendingClub Bank — Best 3-Year CD
–APY: ~3.80%
–Minimum deposit: $500
–Terms available: 6 months to 5 years
–FDIC insured: Yes
LendingClub Bank offers a limited but well-priced CD lineup at a $500 minimum — accessible for most savers. Rates across the 6-month to 5-year range are fairly competitive, making it a solid choice when you want a simple, low-minimum option for the 2–3 year range.
7. Best 5-Year CDs
Five-year CDs are the highest-yielding term available at most institutions in May 2026, with top rates reaching 4.20% APY. They make the most sense when you are highly confident rates will fall during your lock-in period (meaning you are protecting today’s rate from future cuts), and when you are comfortable with the money being inaccessible for 5 years without a significant penalty.
First National Bank of America — Best 5-Year CD
–APY: ~4.20%
–Minimum deposit: $1,000
–Early withdrawal penalty: Approximately 730 days of interest — steep
–FDIC insured: Yes
First National Bank of America’s 5-year CD at approximately 4.20% APY is among the highest rates available for this term in May 2026, alongside Newtek Bank’s 10-year CD at the same rate. The $1,000 minimum is reasonable. The early withdrawal penalty is substantial — approximately 2 years of interest — so this product is only appropriate for money you are genuinely committed to setting aside for the full term.
A caution on 5-year CDs in 2026: If the Fed reduces rates significantly over the next 12–18 months, locking in 4.20% for 5 years would prove prescient. But if rates rise — or if your financial situation changes unexpectedly — the early withdrawal penalty erodes your advantage. Many financial planners suggest using a CD ladder (see below) as a more flexible alternative to a single long-term CD.
8. Best No-Penalty CDs: High Rate Without the Lock-In Risk
No-penalty CDs (also called liquid CDs) offer a fixed rate like a traditional CD but allow you to withdraw your full balance — without any penalty — after an initial holding period (typically 6–7 days after opening). This makes them a compelling hybrid between a CD and a high-yield savings account.
Ally Bank — Best No-Penalty CD
–APY: ~3.60% (11-month term)
–Minimum deposit: $0
–Early withdrawal: No penalty after the first 6 days
–FDIC insured: Yes
Ally Bank’s no-penalty CD is the most widely recommended option in this category, with no minimum deposit, a competitive rate, and a clean, simple early withdrawal policy. The trade-off versus a traditional CD is approximately 0.30%–0.60% in rate — a reasonable cost for the flexibility of being able to access funds without penalty at any time after day 6.
When a no-penalty CD beats a HYSA: If you have money you are unlikely to need but want protection against rate cuts, a no-penalty CD locks in today’s rate while still allowing access if circumstances change. It is also useful for emergency fund overflow — money above your core 3-month emergency fund that you are unlikely to need but want to keep accessible.
9. The CD Ladder Strategy: Lock In High Rates and Stay Liquid
A CD ladder is the most effective strategy for maximizing CD returns while maintaining regular access to your money. Instead of locking all your savings in a single CD, you divide your total investment across multiple CDs with staggered maturity dates.
How a Basic 5-Rung CD Ladder Works (Example: $25,000)
| CD Rung | Amount | Term | APY (May 2026) | Matures | Annual Interest |
|---|---|---|---|---|---|
| Rung 1 | $5,000 | 1 year | 3.90% | May 2027 | $195 |
| Rung 2 | $5,000 | 2 years | 4.00% | May 2028 | $200 |
| Rung 3 | $5,000 | 3 years | 3.80% | May 2029 | $190 |
| Rung 4 | $5,000 | 4 years | 3.90% | May 2030 | $195 |
| Rung 5 | $5,000 | 5 years | 4.20% | May 2031 | $210 |
| Total | $25,000 | Avg ~3.96% | ~$990/year |
Starting in year 1, a CD matures every 12 months. At each maturity, you can either withdraw the funds if needed or roll them into a new 5-year CD at whatever rate is available at that time. If rates have risen, you capture the improvement. If rates have fallen, your remaining CDs are still locked in at today’s rates.
The 3-Rung Short-Term Ladder for More Liquidity
For savers who want more frequent access, a 3-rung ladder using shorter terms works similarly:
-One-third in a 4-month CD
-One-third in a 8-month CD
-One-third in a 12-month CD
Every 4 months, one CD matures — providing regular access to funds while earning consistently higher rates than a HYSA. Institutions like Marcus and Bread Savings, which offer strong rates across multiple CD terms, are particularly well-suited for building a ladder at a single institution.
10. CD vs High-Yield Savings Account: Which Is Better in 2026?
| Factor | CD | High-Yield Savings Account |
|---|---|---|
| Rate type | Fixed — guaranteed for the full term | Variable — bank can change it anytime |
| Best May 2026 rate | 4.20% APY | 4.21% APY (Axos ONE) |
| Liquidity | Locked (penalty for early withdrawal) | Fully accessible anytime (1–3 day transfer) |
| Rate protection | Locked in — protected from future rate cuts | Exposed — rate falls if Fed cuts rates |
| Best for | Money you won’t need for the full term; protecting from rate cuts | Emergency funds; money you might need anytime |
| FDIC insured | Yes — up to $250,000 | Yes — up to $250,000 |
The honest answer: In May 2026, the top CD rates and top HYSA rates are nearly identical (both around 4.00%–4.21% APY). The decision therefore comes down entirely to liquidity and rate certainty:
–Emergency fund: Always HYSA. Your emergency fund must be accessible without penalty at any time.
–Money you won’t need for 6–12 months: CD, especially if you expect rates to decline. A 1-year CD at 3.90%–4.00% guarantees that rate for 12 months regardless of Fed actions.
–Short-term savings goals: Consider a no-penalty CD or HYSA depending on your uncertainty about when you’ll need the money.
11. How to Open a CD: Step by Step
- Choose your institution and term — Use the rankings above to select the CD that best fits your timeline and rate preference. Confirm the current APY on the institution’s official website before applying, as rates change frequently.
- Gather your documents — Social Security Number, government-issued ID, U.S. address, and routing/account number of your funding bank account.
- Complete the online application — Most CD applications take 10–15 minutes and are completed entirely online. Identity verification is typically instant. No credit check is required.
- Fund the account within the rate guarantee window — Institutions like Marcus and E*TRADE guarantee the advertised rate if you fund within 10 days of application. Fund promptly to lock in the rate.
- Set a calendar reminder for your maturity date — This is the most frequently missed step. Most banks automatically renew CDs at maturity — often at a lower rate than what you could get elsewhere. Set a reminder 2–3 weeks before maturity to review your options and decide whether to renew, reinvest elsewhere, or withdraw.
- Understand your early withdrawal penalty before committing — Read the penalty terms before funding. On a $25,000 CD with a 270-day interest penalty at 3.90% APY, early withdrawal would cost approximately $720. Make sure you genuinely do not need the money before the term ends.
12. Which CD Is Right for You?
| Your Situation | Best CD Choice |
|---|---|
| I want the highest possible rate right now | Newtek Bank 9-month CD (4.10%–4.20%) or First National Bank of America 5-year (4.20%) |
| I want a competitive rate with the lowest minimum deposit | E*TRADE CD ($0 minimum) or Ally no-penalty CD ($0 minimum) |
| I want a guaranteed rate for 12 months with a trusted institution | Marcus by Goldman Sachs 1-year CD (3.90%, $500 minimum) |
| I want flexibility to withdraw early without penalty | Ally Bank no-penalty CD (~3.60%, $0 minimum, withdraw after day 6) |
| I want to build a CD ladder with one institution | First National Bank of America (3-month to 10-year terms, $1,000 minimum) |
| I want short-term (3–6 month) guaranteed returns | Northern Bank Direct 3-month (4.00%) or Newtek Bank 6-month (4.00%) |
| I have $1,500+ and want strong rates across multiple terms | Bread Savings (competitive across all 3-month to 5-year terms) |
| I want CD access within my existing investment account | E*TRADE CD (through Morgan Stanley; $0 minimum; multiple terms) |
13. Frequently Asked Questions
What is the best CD rate available in May 2026?
The highest CD rates in May 2026 reach 4.20% APY, available from Newtek Bank (9-month term) and First National Bank of America (5-year and 10-year terms). For the most popular 1-year term, Marcus by Goldman Sachs offers 3.90% APY with a $500 minimum deposit and a 10-day rate guarantee window. All rates are variable across institutions and can change at any time — verify directly with the institution before opening an account.
Are CDs safe in 2026?
Yes. CDs at FDIC-member banks are insured up to $250,000 per depositor, per institution, per ownership category — backed by the full faith and credit of the U.S. government. Your principal cannot lose value due to market movements. The only risk is the opportunity cost of locking in a fixed rate if market rates rise significantly during your term, or the early withdrawal penalty if you need funds before maturity.
Should I open a CD now or wait for higher rates?
The Fed held rates at 3.50%–3.75% at its April 2026 meeting, with the next decision scheduled for June 16–17, 2026. Most market participants expect rates to remain flat or decline in 2026 rather than rise meaningfully. Waiting for significantly higher CD rates is unlikely to pay off in the current environment. If you have money you won’t need for 6–18 months, locking in current rates now is generally the prudent choice.
What happens when my CD matures?
When a CD reaches its maturity date, most banks automatically renew it for the same term at the current rate — which may be lower than the rate you originally earned. You typically have a grace period of 7–10 days after maturity to withdraw funds, transfer them elsewhere, or open a new CD at whatever rate you choose. Always set a calendar reminder 2–3 weeks before your CD matures so you can review your options rather than defaulting to an auto-renewal at a potentially inferior rate.
What is the difference between a regular CD and a no-penalty CD?
A traditional CD charges an early withdrawal penalty — typically 90–270 days of interest for short-term CDs and up to 730 days of interest for 5-year CDs — if you access your funds before the maturity date. A no-penalty CD allows you to withdraw your full balance at any time (usually after a brief initial period of 6–7 days) without any fee. No-penalty CDs typically offer slightly lower rates than comparable traditional CDs — currently approximately 0.30%–0.60% less — in exchange for that flexibility.
Can I open a CD inside an IRA?
Yes. IRA CDs combine the rate guarantee of a CD with the tax advantages of an IRA. You can fund an IRA CD with existing IRA money (a rollover or transfer) or with new annual contributions (up to $7,500 in 2026 for those under 50; $8,600 for 50+). IRA CDs are available from most major CD providers. They are particularly effective for conservative savers who want guaranteed returns inside their retirement account without market exposure — but they are less tax-efficient than investing in index funds for most long-term retirement savers.
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Sources: NerdWallet Best CD Rates May 2026 (May 14, 2026) · Bankrate Best CD Rates May 2026 (May 13, 2026) · Fortune Best CD Rates (May 12, 2026) · CNBC Select Best CDs May 2026 · Marcus by Goldman Sachs official CD page · Ally Bank official CD page · Federal Reserve rate decision April 29, 2026. All APYs verified May 12–15, 2026 and subject to change at any time.
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