MYGA vs. CD: Which Earns More in New Jersey Right Now?

If you have money sitting in a CD right now, you are probably earning somewhere between 4.00% and 5.00%. That is better than it was a few years ago — but there is a product most bank customers have never heard of that is quietly outperforming CDs right now, often by a full percentage point or more.

It is called a Multi-Year Guaranteed Annuity, or MYGA. And if you are a New Jersey resident with money in a CD, it is worth understanding how it compares.

What Is a MYGA?

A MYGA is a fixed annuity issued by an insurance company. You deposit a lump sum, the insurer guarantees a fixed interest rate for a set term — typically 2 to 10 years — and your money grows tax-deferred until you withdraw it.

That last part matters more than most people realize.

The Rate Comparison

As of June 2026, top CD rates from major banks are sitting around 4.50% to 5.00% for a 5-year term. Top 5-year MYGA rates available to New Jersey residents are currently as high as 6.00% or more from carriers with solid AM Best ratings.

That is a meaningful difference. On $100,000 over 5 years:

• 5-year CD at 4.75%: $126,000
• 5-year MYGA at 6.00%: $133,800

That is nearly $8,000 more — from money that was going to sit somewhere safe regardless.

The Tax Difference

This is where MYGAs pull further ahead for many savers.

CD interest is taxed every year whether you take it or not. If your CD earns $4,750 in year one, you owe income tax on $4,750 that year — even if you reinvested it.

MYGA growth is tax-deferred. You do not pay taxes on the interest until you actually withdraw it. That means the full amount compounds year after year, untouched by annual taxes.

For someone in the 22% federal bracket, that difference in after-tax compounding can add up to thousands more over a 5-year term.

The Liquidity Question

CDs win on flexibility. Most MYGAs allow 10% of your account value as a free withdrawal each year, but taking more than that before the surrender period ends triggers a penalty — similar to a CD early withdrawal fee, but structured differently.

If you might need full access to the money within the term, a CD is safer. If this is money you do not plan to touch — a portion of your savings earmarked for retirement, for example — the MYGA structure is not a meaningful constraint.

FDIC vs. Insurance Guaranty

CDs are FDIC insured up to $250,000 per depositor per bank. MYGAs are backed by the issuing insurance company and protected by the New Jersey Life and Health Insurance Guaranty Association (NJLHIGA) up to $500,000 per person.

That coverage limit is actually higher than FDIC for most savers — and the insurance companies issuing top-rated MYGAs have strong financial strength ratings from AM Best.

Who Should Consider a MYGA Instead of a CD?

A MYGA makes sense if you:

• Have $10,000 or more sitting in a CD, savings account, or money market
• Do not need full access to the money during the term
• Are in a tax bracket where deferring interest saves you meaningful money
• Want a higher guaranteed rate than the bank is offering

It does not make sense if you need full liquidity, have a very short time horizon, or are using the money as a true emergency fund.

The Bottom Line

CDs are fine. MYGAs are often better — higher rates, tax-deferred growth, and solid protection — for the portion of your savings you were going to leave alone anyway.

If you want to see exactly which MYGA rates are available to you as a New Jersey resident right now, use the rate comparison tool on our home page. Or reach out directly — comparing your current CD to a MYGA takes about five minutes.