📌 Key Takeaway: Key CD facts: interest is fixed for the term; early withdrawal penalty is typically 90–180 days of interest; FDIC insured up to $250,000; rates are set when you open the CD; you can have CDs at multiple banks to stay under FDIC limits; and interest earned on CDs is taxable income in the year credited.
CD FAQs 2026
Below are the most common questions about certificates of deposit, covering rates, penalties, and how CDs compare to other savings options.
Quick Reference: Key Facts
- CD interest rates are fixed for the entire term once opened
- Early withdrawal penalties typically range from 90 to 180 days of interest
- FDIC insurance covers CDs up to $250,000 per depositor, per bank
- You can hold CDs at multiple banks to diversify and maximize insurance coverage
Frequently Asked Questions
Do CDs compound interest?
Yes, most CDs compound interest, typically daily or monthly, which is reflected in the APY (annual percentage yield) figure — always compare APY, not the simple interest rate, when shopping CDs.
Can I lose money in a CD?
Your principal is protected by FDIC insurance up to $250,000, so you can't lose your original deposit. However, an early withdrawal penalty can eat into earned interest and, in rare cases of very early withdrawal, a small portion of principal if the penalty exceeds interest earned.