8 common certificate of deposit account types explained
Different types of CDs offer varying levels of flexibility, interest rate features, and deposit requirements, helping savers choose what best fits their goals.
Key takeaways
There are multiple types of CDs, each with different terms, interest rate structures, and withdrawal rules.
Some CDs focus on predictability (like traditional or jumbo CDs), while others offer flexibility or rising rate potential (like no-penalty, step-up, bump-up, and add-on CDs).
Choosing the right CD depends on your timeline, liquidity needs, and rate outlook, so comparing features before opening an account can help you match your financial goals.
What is a certificate of deposit (CD)?
If you’re looking for a predictable way to grow your savings, you might want to consider a certificate of deposit (CD). This type of savings product lets you place a fixed amount of money into an account at a bank or credit union for a set term. During that time, your interest rate generally stays fixed, which may appeal to savers who prefer stability over flexibility.
Because your money stays locked in until the CD matures, banks may offer higher interest rates than what you’d find with a regular savings account. Some common CD term lengths include:
Three months
One year
Five or more years (if offered)
CDs tend to work for those who won’t need access to their funds right away, since withdrawing early can come with penalties.
Depending on the issuing bank or credit union, your principal may also be protected up to FDIC or NCUA insured limits ($250,000 per individual, per bank, per account type), adding an extra layer of safety and security as you plan your finances. Therefore, this product offers a straightforward option for those seeking steady returns with low risk.
Overview of 8 popular certificate of deposit types
With more ways to earn interest today than just a traditional savings account, understanding the most common certificate of deposit types may help you refine your savings and investing strategy. Whether you're comparing bank offerings or exploring brokered instruments via an investment platform, each CD type brings unique advantages depending on your needs.
Here are eight popular types of CD accounts to be aware of:
1. Traditional (fixed-rate) CDs: a predictable and traditional option
When stability is your main priority, fixed-rate CDs might feel like a natural fit, as these traditional accounts offer a set interest rate for the entire term, so you know exactly what return to expect from day one to maturity. This predictability may appeal to those who prefer not to worry about daily market shifts or rate fluctuations. CDs may sometimes require certain minimum deposits that may vary by institution, but all CDs offered by Raisin only require a $1 minimum deposit. As one of the most widely used types of CDs, a fixed-rate option could make sense if you’re comparing types of CD accounts and want a straightforward solution that rewards long-term commitment.
2. No-penalty (liquid) CDs: flexible access without fees
Looking for flexibility without giving up structure? A no-penalty CD may allow you to withdraw funds early without facing a penalty, giving you more control without abandoning a fixed-term savings option. Since these accounts offer penalty-free access, the no-penalty CD rates may be a bit lower than with standard CDs. That tradeoff might still make sense if you’re prioritizing liquidity for upcoming expenses, building out short-term savings goals, or building an emergency fund. These CDs blend the reassurance of fixed terms with the flexibility to adapt when needed.
Bank
Product
APY
Maturity
Raisin is not an FDIC-insured bank or NCUA-insured credit union and does not hold any customer funds. FDIC deposit insurance covers the failure of an insured bank and NCUA deposit insurance coverage covers the failure of an insured credit union.
3. Jumbo CDs: for large deposits
If you’re working with a large deposit, a jumbo CD might be an option to explore. Jumbo CDs require larger initial deposits than traditional CDs, typically $100,000 or more, but requirements may vary by institution. This type of CD may be more appealing to institutions or individuals with a high net worth who prioritize preserving capital rather than maximizing returns. However, you may also want to ensure your deposits are within the deposit insurance limits, as interest earned on your account also counts towards the $250,000 per depositor, per-institution maximum.
4. Step-up CDs: scheduled interest rate increases
If the idea of locking in a CD is appealing now, but you don’t want to miss out on possible rate gains later, a step-up option could offer a middle ground. These products come with a built-in schedule for interest rate increases (often every six or twelve months), allowing your earnings to grow over time in a predictable way. Each bank sets its own increase pattern, so reviewing the fine print before opening up a CD might be a good idea. Step-up CDs might make sense if you expect a rising rate environment but prefer securing a CD today rather than waiting. The scheduled rate hikes provide a sense of momentum while keeping your principal secure for the full term.
5. Bump-up CDs: reactive to rising rates
Similar to step-up CDs, bump-up CDs also allow for interest rate increases. These accounts give you the option to request a higher rate (as opposed to scheduled raises) if your issuing bank raises its interest rate on the same product during your term (usually just once per term). Bump-up CDs might work well for savers who expect rising rates but still want to lock in some of the structure a CD provides. The ability to trigger a new rate adds a layer of flexibility, even if it’s limited. Keep in mind the boost isn’t guaranteed, so this type of CD may suit those looking to balance steady growth with a little extra control if the market moves favorably.
6. Add-on CDs: contribute more over time
If your savings plan changes over time, an add-on certificate of deposit might offer the flexibility you need. These CD accounts allow you to make additional deposits after the initial funding, all while maintaining a fixed interest rate. This option might suit savers who prefer gradual growth and want to contribute in stages, especially if income comes in at varying intervals. Keep in mind, policies can differ between banks or credit unions. Depending on the account, there might be:
Limits on the total amount you can deposit
Restrictions on how often you can contribute
Cutoff dates for final add-on deposits
7. Brokered CDs: utilizing investment platforms
Another route some savers explore involves brokered CDs, which are made available through an investment platform rather than directly from a bank or credit union. These CDs are sometimes treated like securities and might even be traded on a secondary market. This setup could give access to a broader selection of institutions and potentially higher APYs (annual percentage yields) than traditional CD accounts. However, selling a brokered CD before it matures isn’t always simple, as resale opportunities can be limited, and the price you receive might depend heavily on market conditions. If you already manage investments within a brokerage account and are comfortable with market-based products, this CD type might align well with your strategy.
8. Market-linked or indexed CD: reactive to market performance
For those curious about combining secure savings with a market-oriented twist, market-linked certificates of deposit may offer a unique alternative. Instead of earning a fixed interest rate, your return is tied to the performance of a market index, which means your earnings could rise when the index performs well. However, potential returns are often capped, placing a limit on how much you can earn, even during strong market periods. While your principal is typically protected (if issued by an FDIC- or NCUA-insured institution), the interest outcome isn’t guaranteed. This type of CD could appeal to savers open to market-based gains who still want to keep their core investment safe from direct losses.
Comparison table: CD types at a glance
Here is a side-by-side comparison of the 8 common CD types for a better overview:
CD Type | What it is | Flexibility | Typical minimum deposit | Rate type | Best for |
Traditional CD | Fixed interest rate for a set term | Early withdrawal penalty applies | Low to moderate (varies by bank). $1 minimum deposit through Raisin | Fixed | Savers who want predictable growth and won’t need access to funds. |
No-penalty CD | Allows withdrawal before maturity without penalty, usually after a short lock-up period | Early withdrawals allowed penalty-free | Usually low to moderate (varies by bank). $1 minimum deposit through Raisin | Fixed (typically slightly lower than traditional CD rates) | Those wanting some flexibility without sacrificing interest. |
Jumbo CD | Like a traditional CD, but requires a large minimum deposit | Early withdrawal penalty applies | High, often $50,000 to $100,000+, but may vary | Fixed (may offer slightly higher rates) | Savers with large funds seeking stable, low-risk returns |
Step-up CD | Interest rate automatically increases at set intervals during the term. | Early withdrawal penalty typically applies | Varies by institution | Automatically increasing | Those wanting some protection against rising rates without having to act |
Bump-up CD | Allows the account holder to request one or more rate increases if market rates rise | Early withdrawal penalty typically applies | Varies by institution | Customer-requested increase | People worried about locking in too soon if rates rise |
Add-on CD | Allows additional deposits during the term (unlike most CDs) | Early withdrawal penalty typically applies | Low to moderate | Fixed or adjustable | Savers who want to lock in a rate now and add funds later |
Brokered CD | CD purchased through a brokerage firm instead of directly from a bank; may be traded on a secondary market | Potential for early withdrawal if you can sell the CD before the term (as opposed to withdrawing) | Varies, can be low | Fixed | Investors who already use brokerage accounts and want market liquidity |
Market-linked CD | Returns are tied to a market index, may offer principal protection but variable growth | Early withdrawal penalty typically applies | Usually moderate to high | Variable, based on index performance | Savers wanting market-linked upside with lower risk than direct investing. |
How to choose the right type of CD for your goals
Are you trying to invest in CDs, but still wondering how to align a CD with your financial priorities? It may be helpful to start by looking at your savings goals and how long you expect to keep your funds untouched. By weighing factors like scheduled rate changes, bump features, or exposure to securities, you might build a more tailored rate shopping approach to support your long-term goals. This can help you get a better idea of how much money to save in a CD.
If you anticipate needing earlier access, options like no-penalty or add-on CDs might offer more flexibility, allowing you to balance short-term financial planning with predictable earnings.
For longer-term objectives, locking in funds with a high-yield or jumbo CD could support a more growth-focused investment approach, potentially earning better APYs in return for reduced liquidity.
Since CD features can vary widely between institutions, a CD comparison may help identify the right fit. Consider reviewing offerings based on terms, rates, and any applicable penalties to help you find a CD that best fits your needs.
Opening and managing your CD account through Raisin
Getting started with a certificate of deposit might be simpler than you think. The Raisin marketplace can help you get started quickly. Raisin offers access to a range of CD options that might appeal if you're looking for simplicity, competitive returns, and no monthly fees. Whether you're just starting out or comparing different types of CD accounts, staying proactive might help your savings remain aligned with your long-term goals.
Simply explore CDs and other account types, compare rates, and sign up to start boosting your savings today!
FAQs on different certificate of deposit types
What is the best type of CD for beginners?
While the best type of CD will be the one to most closely fit your needs, a traditional fixed-rate CD might be a starting point to consider because the terms are clear, the interest rate is predictable, and it’s easier to compare rates across banks. If you’re concerned about needing access to your money sooner, a no-penalty CD may provide more flexibility.
Can I hold multiple types of CDs at once?
Yes. Many savers use multiple CD types or build a CD ladder, opening several CDs with different maturity dates. This approach can help balance earning interest with keeping periodic access to your funds.
Do different CD types have different tax rules?
No. Interest earned on CDs is taxed the same way across all CD types. Interest is generally considered taxable income in the year it’s earned, even if you don’t withdraw it until maturity.
If the CD is held inside a tax-advantaged account (like a CD in an IRA), the tax treatment follows the account’s rules, not the CD type.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
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*APY means Annual Percentage Yield. APY is accurate as of May 20, 2026. Interest rate and APY may change after initial deposit depending on the terms of the specific product selected. Minimum opening deposit is $1.00.
Raisin is not an FDIC-insured bank, and FDIC deposit insurance only covers the failure of an insured bank.
Raisin is not an NCUA-insured credit union. NCUA deposit insurance only covers the failure of an insured credit union.
Raisin does not hold any customer funds. Customer funds are held in various custodial deposit accounts. Each customer authorizes the Custodial Bank to hold the customer’s funds in such accounts, in a custodial capacity, in order to effectuate the customer’s deposits to and withdrawals from the various bank and credit union products that the customer requests through Raisin.com. The Custodial Bank does not establish the terms of the bank or credit union products and provides no advice to customers about bank or credit union products offered by the applicable bank or credit union through Raisin.com. Each customer also authorizes the Service Bank to move funds among the various banks and credit unions at the customer’s request. First International Bank & Trust (FIBT), Member FDIC, is the Service Bank. Bell Bank and Starion Bank, each Member FDIC, are the Custodial Banks.
†Based on $250,000 in FDIC or NCUA insurance coverage per insurable category of ownership at each partner bank or credit union on the Raisin platform (each a "Product Bank"), when aggregated with all other deposits held by you at such Product Bank and in the same insurable category. Deposits made through Raisin will be eligible to receive deposit insurance from the FDIC or the NCUA (each a "Deposit Insurer") in accordance with and up to the maximum amount permitted by law at each Product Bank. Raisin is not a bank or credit union and does not hold any customer funds. Funds are held at FDIC-insured banks and NCUA-insured credit unions. Deposit insurance covers the failure of an insured bank or credit union. Certain conditions must be satisfied for pass through deposit insurance coverage to apply. Customers may choose to deposit funds with identically registered accounts at different Product Banks on the Raisin platform to be eligible for Deposit Insurer coverage up to $10 million for individual accounts and $20 million for joint accounts when at least 40 Product Banks are utilized. Please be aware, however, that any deposits you have at a Product Bank, whether through the Raisin platform or outside the Raisin platform, that you may hold in the same capacity (such as in an individual capacity or joint capacity) count toward the applicable Deposit Insurer's deposit insurance maximum amount, and any such amounts that you hold in the same capacity at a Product Bank that exceed the maximum insurance coverage by the applicable Deposit Insurer will not be insured. For more information on FDIC deposit insurance, please see here. For more information on the NCUA share insurance fund, please see here. You are solely responsible for monitoring the amount of funds you have on deposit at each a Product Bank, whether through the Raisin platform or outside the Raisin platform, to confirm that the deposits you hold in the same capacity at each Product Bank do not exceed the maximum deposit insurance coverage provided by the applicable Deposit Insurer.