Why MYGAs Beat CDs in 2025

If you’re looking for safe, guaranteed growth in 2025, you’ve probably noticed something: CD rates are dropping. After the big rate run-up, banks are tightening again, and those 5% offers are disappearing.

That’s where Multi-Year Guarantee Annuities, or MYGAs, come in. MYGAs are the annuity industry’s version of a CD, but in many cases, they pay higher fixed rates while offering the same principal protection.

So, before you lock in another CD at your local bank, let’s shoot straight about why MYGAs are often the smarter move.

What Is a MYGA

A MYGA, short for Multi-Year Guarantee Annuity, is a Fixed Annuity that guarantees a specific interest rate for a set number of years. It works like a time deposit, except you’re working with an insurance company instead of a bank.

You choose your term: three, five, or seven years are the most common. During that period, your money earns a guaranteed rate with zero market risk. At the end of the term, you can renew, transfer it to another contract, or withdraw your money. It’s simple, predictable, and fully contractual.

That’s what separates MYGAs from the “what if” world of Wall Street.

How MYGAs Differ from CDs

A CD is issued by a bank and backed by FDIC insurance. A MYGA is issued by an insurance company and backed by the company’s financial strength, along with state guaranty association coverage.

Both guarantee your principal, but MYGAs often pay higher rates because they’re offered by insurers competing nationwide, not just local banks.

There’s also a significant tax difference. CD interest is taxed each year as it’s credited, even if you don’t touch it. MYGA interest grows tax-deferred, which means you don’t pay taxes until you withdraw the funds. That deferral allows your money to compound faster, especially if it’s part of an IRA or long-term plan.

In short, CDs are local, taxable annually, and tend to pay less. MYGAs are national, tax-deferred, and usually pay more.

Why MYGAs Outperform CDs in 2025

Even as interest rates cool, MYGA yields remain competitive because insurance carriers are battling for your business across all 50 states. That kind of national competition is something your neighborhood bank can’t match.

At The Annuity Man, you can run real-time MYGA quotes from every carrier in the country, 24/7, no phone calls, no emails, no “let me get my manager” nonsense. You’ll see the best contractual rates available, updated daily. That’s how you shop for guarantees like a pro.

The Tax Deferral Advantage

Tax deferral is one of the biggest reasons MYGAs often win over CDs. With a CD, you owe income tax every year on the interest you earn. With a MYGA, you don’t pay any taxes until you withdraw.

That means your money compounds faster because you’re earning interest on both your original principal and your untaxed interest growth. For retirees who don’t need the income right now, that advantage adds up fast, especially in higher tax brackets.

Are MYGAs Safe

Yes. MYGAs are Fixed Annuities, which means your principal is protected from market losses. They’re backed by the issuing insurance company’s general account and covered by your state’s guaranty association, typically up to $250,000 per owner, per company.

If you’re investing more than that, spread your money across multiple carriers. That keeps all of it within the coverage limits.

Unlike the market, your MYGA’s value never drops because of volatility. What you’re promised is exactly what you’ll get.

When a CD Still Makes Sense

To be fair, CDs aren’t useless. If you need quick liquidity or want to stick to shorter-term commitments, a CD might be a fine choice. You can usually access funds faster, though you’ll trade off some yield.

But if your goal is higher guaranteed returns, long-term growth, and tax deferral, MYGAs usually come out ahead. Some MYGAs also allow annual interest withdrawals, giving you income flexibility without touching your principal.

Choosing the Right MYGA

Don’t chase the highest rate just because it looks flashy. The best MYGA is the one that fits your goals. Ask yourself two simple questions:

1. What do I want the money to contractually do?
2. When do I want those guarantees to start?

If your answer is “I want safe, guaranteed growth,” a MYGA fits perfectly. If you eventually want income, you can ladder multiple MYGAs or combine them with income annuities to create flexibility.

And make sure you’re working with an independent, licensed expert, someone who can shop all carriers, not just one.

The Bottom Line

In 2025, CDs are slipping while MYGAs are holding strong. If you want a guaranteed rate, tax-deferred growth, and protection from market chaos, MYGAs deliver all of that, and more.

You can quote, compare, and buy directly through The Annuity Man, the nation’s leading independent source for annuities.

You own an annuity for what it will do, not for what it might do. That’s the truth about MYGAs: no steak dinners, no sales hype, just contractual guarantees.