CDs vs. MYGAs: Which is Better for Your Money in 2026?

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It's the One of a Kind Financial Show Daily, and I'm your host, Mike Milligan. This past week on the One of a Kind Radio Show, financial show, Gary Nolan had the weekend off. He was not able to join me on the show, so I went solo on the whole show. And in the first segment that day, I talked about a very distinctive difference between a certificate of deposit and a multi-year guaranteed annuity. That difference can be the difference between almost up to 2% in interest, tax deferral, and taking charge of what the future's going to be. I want to share that segment with you today, and I want you to know you're one of a kind. As you listen to the segment, if you have questions or specifics about how a multi-year guaranteed annuity can fit in your safe money portfolio, please reach out to us at One Oak Financial.

Welcome to the One of a Kind Financial Show. This is Mike Milligan. This week, Gary Nolan. My consumer advocate has the week off, and I'm going to come to you this week on solo. Gary typically asks me at this point in the show, Mike, where are you in the world right now? And this week I'm coming to you live from Norfolk, Virginia, where spring has sprung. Folks, the pollen is right around the corner, so get ready for what is to come. But let's dive into the show today. This is the One of a Kind Financial Show, and I am Mike Milligan with One Oak Financial. Certified Financial Planner for over 25 years, helping individuals in the Hampton Roads area and beyond to build a one-of-a-kind financial plan for their one-of-a-kind life. Our office is located at 5005 Colley Avenue in Norfolk, Virginia, just right off Old Dominion's campus, and we look forward to servicing you. But let's get into the topic for this first segment. In the promo for this, I said that I'm getting this question over and over again. About should I lock in a CD rate at the bank now or look for other alternatives? So for the next few minutes, I'm going to walk through what CDs are doing right now and then talk to you about an alternative called a multi-year guaranteed annuity and tell you what they're doing right now and how I help clients think through which one belongs where in their plan, not which one just has the shiny rate. So first, let's define these terms in plain English. A certificate of deposit or a CD is a time deposit at a bank or credit union. You give the bank your money for a set term. Maybe that's 1 year, 3, 5 years, maybe it's 6 months or 7 months, and they guarantee you a fixed interest rate that's backed by the FDIC, the Federal Deposit Insurance Corporation, or NCUA, the National Credit Union Association. And that's typically up to $250,000 per depositor per institution. And there's rules around that about what, uh, how about how you can get extra coverage for those. Uh, a multi-year guaranteed annuity, uh, or a MYGA, is a fixed annuity issued by an insurance company. You give the insurer your money for a set term, often 3 to 10 years, and they guarantee an interest rate for that period of time. In both cases, you're getting a guaranteed rate and you're giving up some liquidity for a period The big differences are who's backing the promise, how the taxes work, and what the penalties look like. And then the biggest key in 2026 is what does the rates look like? So, let me give you a snapshot. What are the rates doing today? Let me talk to you straightforward about the numbers because that's what everybody wants to know. I'm going to speak in ranges because rates move and they may be higher or lower by the time you're listening to this over the weekend. So on the CD side, as of March 2026, competitive 1-year CDs are topping around— out around the mid-3s, so maybe slightly above 4% at some banks offering specials. And that depends on the bank and whether it's a jumbo CD or not. A jumbo CD is typically defined as something in the 6-figure range. For example, some nationally Available 1-year CDs right now are still advertising APY, annual percentage yield, near 4% for larger deposits. On the MYGA side, the multi-year guaranteed annuity side, that are in the 5 to 7-year terms, they're still showing headline rates in the mid-5% to low 6%. There are 5-year MYGAs around 6% right now, 7-year terms with credit ratings in B+ or B++ rated companies that are topping 6%. So, So just from a raw rate perspective in 2026, you can often earn 1.5 to 2 plus percentage points gap or more money between a good CD and a competitive MYGA of similar or slightly longer term. Let me remind you at this point, I am with One Oak Financial and I'm gonna give you the number to call into the show today because I am answering the phone in Gary's absence today and our team's absence today. If you wanna get more information about CDs, Or MYGAs from One Oak Financial today, you can text the word IDEAS, I-D-E-A-S, to 600-700, or call me directly at 757-403-5078. Let me get back to the topic of MYGAs and CDs now. So, uh, not only are tax rates or interest rates higher on MYGAs currently than they are with CDs, they also come with the backing of the state insurance guarantee. Well, but then there's the tax treatment, and let me talk to you about tax treatment for Rate isn't the whole story. The tax treatment is where MYGAs quietly pull away from— for a lot of my listeners. With a CD, the interest that credits each year is taxable to you in that year as ordinary income, even if you leave it in the CD and don't spend a dime. With a MYGA, the interest grows tax-deferred. You don't get a 1099 every year. You owe tax when you take The money out. That means you're earning interest on your interest before the IRS ever takes a bite. For someone in a very moderate to high tax bracket who doesn't need the income right now, that tax deferral plus a higher starting rate can make a meaningful difference over a 5, 7, or 10-year horizon. And then let's talk about safety and flexibility before we go to our first break, because that's where your personal comfort level comes in. See, CDs are backed by the FDIC or the National Credit Union Association up to certain insurance limits. If you stay under those limits and you're at a solid institution, that's about as safe as it gets from a credit risk standpoint. You usually have shorter terms available, even, even just a few months, but you'll pay an early withdrawal penalty if you break the CD before maturity. MYGAs are backed by the claims-paying ability of insurance companies and are supported by the state level by guarantee associations, not FDIC insurance. They're designed as long-term contracts. Most MYGAs allow some liquidity with penalty-free withdrawals, say maybe 10% per year, but larger withdrawals in the early of years typically trigger surrender charges, impossible market adjustments. So what do I tell my clients on this subject? CDs are bank safe and often a bit more flexible on term length. MYGAs are insurance company safe and want a longer-term commitment in exchange for a significantly higher rate. In this current market, sometimes 50 to 60% more in interest rate and tax deferral. A double whammy or a double benefit, higher rate and tax deferral. So when might a CD make more sense? As we wrap up this segment, there are definitely times when it makes more sense. So if you need the money soon, 6 months, 7 months for a home purchase, college tuition, or even an upcoming business move, and we're talking about a very short period of time, 6 to 18 months, CDs can make sense. If you're extremely conservative and you want everything FDIC insured, even while sacrificing a lower rate, then a CD may work sense. Or if the amount is small, if you're talking about $5,000, $10,000, then a CD works. Well, a MYGA, on the other hand, tends to shine in plans that I build at One Oak Financial. And that's where the one-of-a-kind financial plan is so different because we bring to you options like multi-year guaranteed annuities to get more return with no fees, right? And it's part of how we build a tax plan that where you pay the tax that you want to when you want to. That's why MYGAs can be a part and part of that retirement outcome that you can't outlive and help you sleep at night. MYGA interest when withdrawal is typically going to be higher than what you get in a CD. And then Uh, an investment long-term care and legacy plan. See, that's the one-of-a-kind financial plan. Those are the plans we build and where when we look and analyze things like CDs versus MYGAs, man, we often find that, that tax deferral and that interest rate is just enough. And so if you would like to speak more about this topic with me and have a conversation about, uh, anything on your financial plan, and so we can build a one-of-a-kind financial plan for for you, I invite you to text the word ideas to 600-700 or call me today at 757-403-5078.

This has been the One of a Kind Financial Show Daily with your host, Mike Milligan. I hope you enjoyed that segment from last week's solo episode of the One of a Kind Financial Show. Just as a reminder to reach out to us, you can do that at, uh, also at www.oneoakfinancial.com. That's the number one oakfinancial.com. I am an investment advisory representative with Advisory Alpha LLC, registered with the Securities and Exchange Commission. Ideas by Mike, doing business as One Oak Financial, is an unaffiliated entity of Advisory Alpha LLC. This podcast is done for educational purposes only. Please consult with a licensed financial professional, a tax advisor, or an attorney before making any decisions around investing, taxes, or estate planning. All right. For more information about our firm, please go to our website or reach out to schedule a one-on-one consultation with me personally. We'll see you tomorrow.

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