Fixed annuities and CDs are both safe, interest-bearing savings vehicles — but they differ in important ways. In many rate environments, fixed annuities (especially MYGAs) pay higher rates than comparable CDs while adding the benefit of tax-deferred growth.
Rate Comparison
MYGA rates tend to be competitive with or higher than bank CD rates for the same term length. The key difference: CD interest is taxed each year, while annuity interest grows tax-deferred until withdrawal. For a deeper look at how annuity taxation works, see our guide to how annuities are taxed.
Head-to-Head: Fixed Annuity vs. CD
- Rate: Annuities often equal or exceed CD rates — see current fixed annuity rates
- Taxes: CDs taxed annually; annuities tax-deferred
- FDIC Insurance: CDs are FDIC-insured; annuities are protected by state guaranty associations
- Liquidity: Both have early withdrawal penalties — review annuity surrender charge schedules before committing
- Income option: Annuities can add lifetime income; CDs cannot
When a CD Still Makes Sense
If you need FDIC protection or may need access to funds without penalty within a very short term, a CD may be preferable. For longer-term savings goals with a tax focus, annuities usually win. If you’re rolling over a retirement account, also consider whether an IRA or 401(k) rollover into an annuity makes sense.
Call us at 1-888-972-0024 to compare current MYGA rates against your best CD offer.