CD rates: how they compare with the alternatives
A certificate of deposit pays a fixed rate for a fixed term and is covered by FDIC insurance up to the limit. Before locking money in, it is worth checking what similar-term alternatives pay – after tax.
What to compare a CD with
- Treasury bills and notes – backed by the US government; interest is exempt from state and local income tax.
- Money-market funds – daily liquidity, not FDIC insured.
- Agency, municipal and high-grade company bonds – municipal interest is often free of federal tax, sometimes state tax too.
- Brokered CDs – can be sold before maturity, but the price can move.
Why tax changes the ranking
CD interest is taxed federally and by your state. A Treasury with a slightly lower stated rate can pay more after tax in a high-tax state. IncomeGrid ranks every item by yield after tax for where you live: federal, state and each investment type (Treasuries, municipal bonds, corporate bonds, funds, REITs and filed offerings are each taxed differently).
Find the best fit
IncomeGrid has 40,000+ investment options screened, with risk levels 1–5 and filters by term, so you can see CD-like terms across Treasuries, bonds and funds in one list.
Sources
- Investor.gov – Certificates of deposit (CDs)
- FDIC – Understanding deposit insurance
- FDIC – National rates and rate caps
- U.S. Treasury – Daily Treasury par yield curve rates
More guides
- Turning your 401(k) into income
- How to keep your money ahead of inflation
- Car loan or pay cash: a simple comparison
- Annuities and the alternatives for steady income
- Alternatives to a high-yield savings account
- Saving for a house: where to keep the down payment
- Where to invest retirement money for monthly income
- Dividend income compared with other income investments
- Money market funds and accounts explained
- What to do with side hustle income
- Passive income from investments
- Treasury bills, notes and I bonds
- Real estate income without buying property
- Saving for college: 529 plans and the alternatives
- Stocks and income investments
- The stock market and steady income
- Adding income to a Nasdaq-heavy portfolio
- What to invest in: the main options
- How to invest: first steps
- Social Security and the income gap
- Gold versus income investments
- The S&P 500 and income
- Bonds explained
- Income investments in a Roth IRA
- Pay down the mortgage or invest?
- Investment and compound interest calculator
- Dividend ETFs: how they work
- Emergency fund: where to keep it
- Early retirement: turning savings into income
- Asset allocation and risk versus return
- Alternative income investments open to everyone
- Where to invest money
- Compare investment returns side by side
- High-yield income investments
- Investments that pay monthly
- Where to find the highest interest rates
- Best interest rate accounts: savings and beyond
- Municipal bonds and tax-free income
- Tax-equivalent yield, explained simply
- Yield vs interest rate: the difference
- High-yield bonds explained
- Safer investments with higher yields
- Best yield investments, by risk level
- How to build a bond ladder
- Investments that pay interest
- How much interest will my money earn?
- Find income investments
- Example income portfolios
- Yields around the world
- Method and sources