3-Year Fixed Annuity VS. CD: Comparing Rates

Shawn Plummer

CEO, The Annuity Expert

Fixed Annuities Typically Offer Higher Rates

Three-year fixed-rate annuities often offer higher interest rates compared to Certificates of Deposit (CDs) of the same duration. This is because annuities are designed to provide long-term financial security and include additional features such as tax-deferred growth and potential death benefits. Moreover, annuities typically involve a higher level of risk and commitment than CDs, which can contribute to their higher interest rates.

Fixed Annuities

  • Higher Interest Rates: Generally, fixed annuities offer higher interest rates compared to CDs.
  • Tax Deferral: Interest earned is tax-deferred until withdrawal.
  • Guaranteed Income: Provides a guaranteed income stream for a specified period or for life.
  • Minimum Investment: Often requires a higher minimum investment than CDs.

Certificates of Deposit (CDs)

  • Fixed Interest Rates: Offers fixed interest rates for the term of the CD.
  • Lower Risk: Considered lower risk as they are FDIC insured up to certain limits.
  • Penalty for Early Withdrawal: Early withdrawal usually incurs a penalty.
  • Accessibility: Generally more accessible with lower minimum investment requirements.

Comparing The Options

Feature3-Year Fixed AnnuityCertificate of Deposit (CD)
Interest RatesTypically HigherLower
Risk LevelModerateLow
Tax on InterestDeferredPaid Annually
Minimum InvestmentHigherLower
Early WithdrawalPossible penaltiesPenalty fees
GuaranteeIncome GuaranteeFDIC Insured


When choosing between a 3-year fixed annuity and a CD, consider the higher interest rates offered by annuities against the lower risk and accessibility of CDs. Fixed annuities are suitable for long-term, tax-deferred savings, while CDs are better for short-term, low-risk investments. Understanding your financial goals and risk tolerance is key to making the right choice.

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Shawn Plummer

CEO, The Annuity Expert

Shawn Plummer is a licensed financial professional, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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