That 5% CD Isn’t Really 5%

Video transcript:

Did you know the interest you earn from CDs is taxed at a higher rate than your investment accounts? It's crazy but true.

CD interest is taxed at your ordinary income tax rate, so if you’re in a higher tax bracket, that 5% CD might look more like 3.5% after taxes.

And nobody at the bank is leading with that part. Meanwhile, your investment accounts are taxed at the much lower capital gains rate - a flat 15% for almost everyone.

Now — I’m not anti-CD. They absolutely have a place. But we need to understand the math and the taxes before we fall in love with the headline rate.

If you’ve got cash sitting in CDs and you’re not sure how it fits into your bigger plan, let’s look at it together and run the real numbers for your situation.

Send me a message and we’ll talk it through.