Current-rate comparison
MYGA vs CD
MYGAs and CDs are the closest fixed-rate comparison because both start with a stated term and rate. The important differences are tax deferral, insurer backing versus deposit insurance, and how painful it is to leave early.
Side-by-side comparison
Where the tradeoffs show up
Rate rows use current figures where they exist; the rest explains the contract and account rules.
| Dimension | MYGA | CD | What this means | Edge |
|---|---|---|---|---|
Rate or yield Rate + rules | 6.65% guaranteed rate from Atlantic Coast Life | 4.2% APY from TAB Bank; national average 1.35% | The annuity rate is 245 bp above the top 5-year CD and 530 bp above the FDIC national average. The annuity side adds tax deferral; the CD side adds federal deposit insurance within limits. | MYGA |
Tax treatment Contract/account rules | Interest is tax-deferred until withdrawal in a non-qualified contract. | Interest is generally taxable each year unless held in a tax-advantaged account. | Taxable-account savers may value the MYGA deferral. | MYGA |
Liquidity Contract/account rules | Free withdrawals and surrender charges define access. | Early-withdrawal penalties define access. | CD rules are usually simpler; MYGA terms can be more restrictive. | CD |
Principal safety Contract/account rules | Backed by the issuing insurer and state guaranty association limits. | Backed by FDIC or NCUA insurance within limits. | The safety question is really insurer credit versus federal deposit insurance. | CD |
Fees Contract/account rules | Typically no explicit annual account fee, but surrender charges can matter. | Typically no annual fee; early-withdrawal penalty is the main cost. | Both are fee-light if held to term. | Tie |
Guarantees Contract/account rules | Guaranteed rate is a contract promise from the insurer. | APY is fixed by the bank or credit union for the term. | Both can be predictable if held through the term. | Depends |
Current data read
What the numbers actually say
Today the top 5-year MYGA rate we see is 6.65%. The top 5-year CD benchmark is 4.2%, and the FDIC national 60-month CD rate is 1.35%. That puts the MYGA 245 bp above the top CD and 530 bp above the national average, with tax deferral on the annuity side and federal deposit insurance on the CD side.
CFA framework
Start with three questions: yield, access, and who stands behind the promise.
Nikhil Anilkumar Bhauwala, CFA, compares cash alternatives by matching the term first, then checking the tradeoff. A higher fixed annuity rate can be valuable, but only if the surrender period and insurer backing fit the job this money needs to do.
Nikhil Anilkumar Bhauwala, CFA- Compare like terms first; a 5-year MYGA belongs next to a 5-year CD or Treasury, not a checking account.
- Then compare the backstop: deposit insurance, a U.S. government obligation, or the insurer claims-paying ability.
- Do not chase a few extra basis points with money that may need to stay flexible.
Plain-English definitions
MYGA
A fixed annuity that guarantees a stated rate for multiple years.
APY
Annual percentage yield, including compounding, used by banks and credit unions for deposits.
MYGA vs CD: FAQ
Is a MYGA better than a CD?
A MYGA can be better when the guaranteed rate and tax deferral are worth the surrender schedule and insurer-credit tradeoff. On this page, the current top 5-year MYGA is 6.65% versus the top 5-year CD benchmark at 4.2%.
Is a MYGA FDIC insured?
No. A MYGA is issued by an insurance company and backed by the insurer claims-paying ability, with state guaranty association protections subject to limits. CDs at covered banks or credit unions have FDIC or NCUA insurance within federal limits.
Which has better withdrawal access?
CDs are usually easier to understand because the early-withdrawal penalty is stated by the bank. MYGAs may allow annual free withdrawals, but surrender charges and waiver language need to be read carefully.
Turn this into a personal comparison
Compare current rates against your age, state, premium, tax status, and income goal before choosing a product or account route.
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