Locking in long-term CD rates: Why consider a CD in 2026?
Key takeaways
Long-term certificates of deposit (CDs) allow savers to lock in a specific interest rate for a period of three to 10 years, providing protection against future market rate decreases.
Since long-term CD rates are fixed, you can calculate the exact value of your investment at the time of maturity. This makes them an effective and low-risk option for long-term financial planning.
Funds in CDs are federally insured up to $250,000 per depositor, per insured institution, per ownership category, ensuring your principal remains secure regardless of bank performance.
Understanding long-term CD rates in 2026
A long-term certificate of deposit (CD) is a time-deposit account with a maturity date typically ranging from three to 10 years. It allows you to lock in a fixed rate for your selected term, which means you know exactly how much interest the balance will earn during that time.
This makes CDs unique to traditional savings accounts, where the interest rate can fluctuate at any time based on the bank's discretion and market conditions.
As of May 2026, the savings landscape is shaped by the Federal Reserve's target benchmark rate, which currently sits between 3.50% and 3.75%. This rate influences the yields that banks and credit unions offer to consumers.
While short-term CDs may occasionally offer higher yields during certain economic cycles, long-term CDs can anchor your interest rate for several years to ensure consistent earnings even if the interest rate environment shifts downward.
Why consider a long-term CD now?
The Fed has held its benchmark rate steady so far in 2026, but cuts could happen. That creates an unusual window for savers. Right now, the best CD rates are topping 4.00% APY, and in some cases long-term CDs can have better rates than what short-term CDs are offering.
This matters because a CD locks in your rate for the full term. If the Fed does end up cutting rates over the coming months, banks typically lower the APYs on new CDs accordingly, but your locked-in rate stays the same. A five-year CD opened today at 4.00% APY would continue earning that rate throughout its term, regardless of what happens to the broader market.
To put that in perspective, a $10,000 deposit in a five-year CD at 4.00% APY earns roughly $2,167 in interest over the full term.
The case for locking in now comes down to a simple calculation. If rates are more likely to fall than rise from here, every month you wait could mean settling for a lower rate.
By opening a five-year CD today, you safeguard your yield against falling interest rates. If market rates drop to 2% or 3% over the next several years, your five-year CD will continue to earn the higher rate you secured today. This makes long-term CDs an attractive option for money earmarked for a specific future goal, such as a home down payment or a child’s education.
It’s also important to remember that a five-year CD won't be the right fit for money you might need soon. But if you have savings you can set aside until 2031, the current rates offer a compelling, generally low risk return.
How the Federal Reserve impacts long-term yields
The interest rates on CDs are closely tied to the federal funds rate set by the Federal Open Market Committee (FOMC). This means the Federal Reserve raises rates, banks typically offer better rates to attract depositors, but when the Fed cuts rates, banks typically offer lower yields to reduce their costs.
Today, many banks have already priced in expected rate changes. This has resulted in a relatively flat yield curve, where the difference between a one-year CD and a five-year CD may be minimal.
However, the advantage of the long-term option is the duration of that yield. While a high-yield savings account offers liquidity, its rate can be reduced the moment the Fed makes a move. A long-term CD guarantees that your yield remains unchanged through the end of the term.
Risks and considerations for multi-year terms
While the security of a fixed rate is a significant benefit, long-term CDs aren’t without trade-offs.
The primary downside is liquidity. When you open a CD, you agree to leave your money in the account until the maturity date. Accessing these funds early typically results in an early withdrawal penalty, which can cost you several months or even a year of interest earnings.
Another consideration is inflation risk. If the rate of inflation rises significantly above your fixed CD rate, the purchasing power of your money may decrease over time. Savers need to balance the desire for a guaranteed return with the need to keep their funds accessible for emergencies.
Strategy: Building a CD ladder in 2026
If you’re unsure about locking all your savings into a single five-year term, a CD ladder can provide a middle ground. With this strategy, you’ll divide your total deposit into several CDs with different maturity dates. You might break up your total deposit into multiple CDs across one, two, three, four, and five years, for example.
As each CD matures, you can either withdraw the cash if you need it or reinvest it into a new five-year CD at the then-current rates. This strategy allows you to take advantage of the higher yields offered by long-term CD rates while still ensuring that a portion of your money becomes available every 12 months.
This approach also helps mitigate the risk of being stuck in a low-rate environment if interest rates happen to rise in the future.
Bottom line
Long-term CDs remain a cornerstone of a conservative financial strategy in 2026.
By locking in a fixed rate today, you protect your savings from the volatility of the interest rate market and ensure a predictable path toward your financial goals.
While they require a commitment to leave your funds untouched, the benefit of a guaranteed yield provides a level of stability that few other savings vehicles can match.
Frequently asked questions
Is it better to get a one-year or five-year CD in 2026?
The choice between a one-year or five-year CD in 2026 depends on your liquidity needs and your outlook on interest rates.
In 2026, one-year CDs often offer slightly higher yields than five-year CDs due to an inverted or flat yield curve. However, a one-year CD only protects your rate for 12 months. If you believe the Federal Reserve will continue to lower rates over the next several years, a five-year CD may be better because it secures today’s rate for a much longer period.
Will CD rates go up further in 2026?
Most market forecasts in early 2026 suggest that interest rates have peaked and are more likely to remain steady or fall slightly.
While individual banks may offer promotional rates to attract new customers, the broad trend for CD yields in 2026 is expected to be flat or slightly declining rather than increasing significantly.
Can I lose money in a long-term CD?
Your principal investment in a CD is safe as long as the amount is within federal insurance limits. CDs at FDIC-insured banks or NCUA-insured credit unions are covered up to $250,000 per depositor, per insured institution, per account ownership type.
The only way to lose money is if you withdraw your funds before the maturity date and the early withdrawal penalty exceeds the interest you have earned, or if your fixed interest rate fails to keep pace with the rate of inflation.
What happens if I need my money before a long-term CD matures?
If you need to access your funds before a CD’s maturity date, you will typically be charged an early withdrawal penalty. This penalty is often calculated as a specific number of days or months of interest.
For long-term CDs, this penalty can be substantial, sometimes ranging from six to 12 months of interest earnings. It is essential to maintain an emergency fund in a more liquid account, like a high-yield savings account, before committing to a long-term CD.
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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 June 24, 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.
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Raisin is not an NCUA-insured credit union. NCUA deposit insurance only covers the failure of an insured credit union.
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