Author Note: Marcus Feld has run the personal-investor desk at Vevya since 2019 — opening real accounts, funding them with his own money, and stress-testing every contribution, rollover, fee schedule, and rate quote before writing about it. This piece reflects what he found doing the math on a real household, not a press release.
When I started shopping fixed annuity rates in 2026, I expected the usual: a wall of 6.5% headline numbers, a phone number to call, and a brochure that makes the product sound like a savings account with better manners. What I did not expect is that the single most important number on the rate sheet — the one that decides whether this instrument actually beats a CD or a Treasury — is the one nobody in the industry points to. The top fixed annuity rates in 2026 genuinely are strong. But most people get this wrong in a specific, expensive way: they compare a simple-interest 6.95% headline to a compound 4.5% CD and walk away convinced the annuity is the easy win. It usually is not. This is the math I actually ran on my own $100,000, and the one version of an annuity that is hard to beat — which is not the one you are afraid of.
The rate table I actually use in 2026 (and why the top of it is a trap)
First, a naming problem that costs people real money. When an agent says “annuity,” they could mean four completely different contracts: a plain multi-year guaranteed annuity (a MYGA, sometimes called a fixed deferred or single premium deferred annuity), a fixed indexed annuity, a variable annuity, or a lifetime income stream. The first one — the MYGA — is the insurance version of a CD: one fixed rate, guaranteed for the full term, compounding tax-deferred, no market exposure. Everything else is a different animal with a different fee structure. When I compare “fixed annuity rates in 2026,” I mean the MYGA, because it is the only one you can put next to a CD and call it apples to apples.
Here is what the market actually paid on the week ending October 1, 2026, pulled from the live carrier feeds the comparison sites refresh daily. These are the numbers I priced, not a marketing snapshot:
| Product (Carrier · term) | Headline rate | What it really compounds at | Min premium | Free withdrawal | AM Best | My rating |
|---|---|---|---|---|---|---|
| Knighthead Staysail 7 (7-yr) | 6.95% simple | about 5.8% | $100,000 | None | A- | ⭐⭐⭐⭐ |
| Oxford Life Multi Select 5 (5-yr) | 6.05% compound | 6.05% | $20,000 | 10% yr 1 | A | ⭐⭐⭐⭐ |
| Athene MaxRate 5 (5-yr) | 5.85% compound | 5.85% | $100,000 | None | A+ | ⭐⭐⭐⭐ |
| Knighthead Staysail 5 (5-yr) | 6.55% simple | about 5.8% | $100,000 | None | A- | ⭐⭐⭐⭐ |
| Mountain Life Alpine Horizon 5 (5-yr) | 6.45% compound | 6.45% | $5,000 | 5% yr 2+ | B- | ⭐⭐⭐ |
| Wichita National Security MYGA 7 (7-yr) | 6.30% compound | 6.30% | $10,000 | None | B+ | ⭐⭐⭐ |
| MassMutual Stable Voyage 5 (5-yr) | 5.50% compound | 5.50% | $10,000 | None | A++ | ⭐⭐⭐ |
| Top 5-year bank CD | about 4.50% compound | 4.50% | $500 | FDIC | n/a | ⭐⭐⭐ |
| 5-year U.S. Treasury | about 4.4% compound | 4.4% | $100 | U.S. govt | n/a | ⭐⭐⭐⭐ |
Three things to notice before I get to the fee. The top of the table is almost always a lower-rated carrier or a simple-interest contract. The “what it really compounds at” column is where the honest comparison lives — much closer to the CD than the headline column suggests. And the two strongest carriers (Athene, MassMutual) pay a full half-point or more below the top of the board, which is the price of credit quality, not a typo.
Simple interest vs compound: the number nobody reads on the rate sheet
This is the line most people get wrong, and it is the single biggest reason the headline gap between an annuity and a CD looks bigger than it is. A compound rate credits interest on your growing balance every year. A simple rate credits interest on your original premium every year, so the interest you earned in year one does not itself earn interest.
On the rate sheets I pulled, the top 7-year number — 6.95% from Knighthead’s Staysail 7 — is simple interest. Convert that to the compound rate it is actually equivalent to and it is roughly 5.8% per year, not 6.95%. The top 5-year simple contract, 6.55%, works out to about 5.8% compounded as well. Put that next to a top 5-year CD at about 4.50% compounded and the real spread is on the order of 125 to 135 basis points, not the roughly 245 basis points you would calculate from the two headlines. That is still a real edge — just not the edge the brochure is selling.
What nobody is discussing is why the top of the board keeps getting quoted in simple interest. It is a presentation choice: simple interest makes the number look bigger on the front page, and the surrender schedule does the quiet work of making sure you hold to the end. If you read “6.95%,” your brain does not subtract the conversion. I now refuse to evaluate any MYGA on its headline number alone — I convert to compound first, in my own spreadsheet, every time.
The surrender charge that makes year one worth less than the rate says
A MYGA is a lock. In exchange for the guaranteed rate, the insurer keeps a surrender charge schedule — the fee you pay if you pull the money out early. On the products in the table above, that schedule typically starts around 10% of your balance in year one and steps down by a point or so each year to zero, usually over seven to ten years. That is the same on the Athene, MassMutual, and Knighthead contracts I priced.
Here is what that does to your effective return, in plain dollars. Fund a $100,000 MYGA at 6.55% and the market gives you a genuine reason to get the money back in month fourteen. You earned roughly $6,550 of interest. The year-two surrender charge on most of these contracts is around 9% to 10%, or $9,000 to $10,000. You just paid more to get out than you earned in a year of interest. In the first three years, the surrender schedule can eat the entire advantage the annuity has over a CD, and in year one it can wipe it out and then some.
Contrary to popular belief, this is not the same as a CD early-withdrawal penalty. A CD penalty is usually a couple of months of interest; a MYGA surrender charge in year one is a full year or more. The “free withdrawal” column in my table — the 10%-in-year-one on Oxford, the 5%-from-year-two on Mountain Life, the 10% liquidity riders on some Knighthead versions — is the one place a MYGA can be made to behave like something liquid, and it is the first line I ask an agent to show me. If a contract has zero free withdrawal and a ten-year surrender schedule, it is not a “CD alternative.” It is a seven-year bet that you will never need this specific $100,000.
The fee the agent eats that you will never see as a line item
This is the part that makes the whole category feel shady, and it is real — but it is also the part most comparison articles never quantify. A plain MYGA does not carry the recurring mortality-and-expense (M&E) fees and rider fees that make variable and fixed indexed annuities expensive to hold. Those M&E charges, when they exist, typically run 0.60% to 1.40% of the contract value per year, and riders stack another 0.25% to 0.90% on top. That is the annuity that eats 2% of your balance every single year. A clean MYGA does not do that — it is genuinely one of the cheapest annuity structures in the market, which is exactly why it is the one most agents have the least reason to hand you.
Instead, the MYGA is paid for with a commission — typically 4% to 8% of the premium, or $4,000 to $8,000 on a $100,000 policy — and it is paid by the carrier, not by you. You will never see it as a line item on your statement. That is why I keep coming back to the carrier column in my table: the top rate on the board is frequently a B- or B++ insurer, and the A++ insurer is half a point or more below it. Part of that gap is credit quality, and part of it is the commission structure baked into the spread. The “best rate” is often the product where the agent makes the most and the carrier is the weakest, and you are the one holding the contract when the general account has a rough year.
Fixed annuity rates in 2026 vs a CD and a Treasury: the real spread
Now the honest, three-way comparison I would put in front of my own household. All three are safe, fixed, and locked for a set term. They differ on the rate, the tax treatment, and the liquidity. I priced all three for a $100,000 five-year hold in an after-tax account.
The MYGA earns roughly 5.8% to 6.05% compounded (depending on carrier and whether it is simple or compound), and the interest is tax-deferred — you do not pay tax on the interest each year, only when you withdraw. That deferral is worth something real: on a $100,000 position at ~5.9%, the roughly $5,900 of annual interest you would otherwise owe tax on stays in the account and compounds. The catch is the surrender schedule and the fact that it is not FDIC-insured. Your protection is the insurer’s general account, backed by your state’s guaranty association (typically capped around $250,000, and varying by state). You are underwriting the carrier’s financial strength, not the federal government’s.
The CD earns about 4.50% compounded, but it is FDIC-insured to $250,000 per bank, the interest is fully taxable every year, and you can usually open one at a $500 minimum. For money you may touch in three to five years, the liquidity and the government backstop matter more than the 135-point spread, and the annual tax bill is a real cost that the annuity’s deferral offsets.
The Treasury earns about 4.4% compounded, is backed by the full faith and credit of the U.S. government, and — the detail that keeps getting overlooked — is exempt from state and local income tax. For anyone in a high state-tax bracket, that exemption can be worth more than the difference between a 4.4% Treasury and a 4.5% CD. It is the safest asset in the Western world, with no surrender schedule at all.
The uncomfortable truth about the comparison: none of these is the “correct” answer. The right one matches the year you will actually need the money. If it is a three-to-five-year goal and you might need it, the Treasury or the CD. If it is money you will not touch for seven years, in a taxable account, at a $100,000+ size, then the 7-year MYGA from an A- or better carrier is one of the best risk-adjusted parking spots in the 2026 market — and it is not the “annuity scam” the internet tells you to run from.
The carrier rating that matters more than the rate
Because a MYGA is not FDIC-insured, the financial strength of the issuing insurer is the actual security you are holding. I look at the rating before the rate, and only then see if the rate is competitive within that rating band. As of late September 2026, the A-rated-and-better market was paying roughly 5.80% to 6.00% on a five-year MYGA, while the very top of the board (6.45% and above) came from B- and B++ carriers. Annuity.com’s own board showed that choosing a carrier rated A- or better can cost as much as half a percentage point of yield on some terms — the premium for not holding the contract when the insurer’s general account takes a hit.
For my own money I draw the line at A-. I will happily take a B++ on a 10-year lock I am certain I will hold, but for the bulk of a real household’s money I want the A- to A++ band. The extra half-point from the B- carrier is not worth the credit risk at that size. That is also why I never chase the single highest number on any rate board; I chase the highest number within the rating band I trust, and I verify it against at least two independent feeds first.
When I would actually put my own money in a MYGA (and when I would not)
Here is my decision rule, the one I would apply to my own $100,000, so there is no room for an agent to talk me into the wrong side of it.
I would buy it if
- The money is for a goal more than five to seven years out and I am confident I will not need it early — a future home purchase, a college fund, a pre-retirement bucket I am not touching before I’m 65.
- It is in a taxable account, so the tax deferral is actually doing work. (If the money is going into a Traditional IRA, I am better off with a bond ladder inside the IRA and skip the annuity’s deferral, which I would not get anyway.)
- I can fund at least $50,000 to $100,000, because the best rates and the best liquidity riders are gated behind $100,000 minimums, and the smallest deposits get the worst terms.
- The contract is from an A- or better carrier, the rate is competitive within that band, and the free-withdrawal rider covers at least 10% in the first few years.
I would not buy it if
- It is my emergency fund. The surrender schedule makes it the worst possible place for money I might need next month. An emergency fund belongs in a high-yield savings account or a short Treasury ladder, where it is liquid and safe.
- The sales pitch is leading with the headline number and the agent will not show me the surrender schedule, the free-withdrawal terms, or the carrier’s AM Best rating. That is a red flag, full stop.
- The “MYGA” is actually a fixed indexed annuity or a variable annuity with riders and an M&E fee. Those are different products with a different, usually worse, fee structure, and the name change is not a small detail.
- The whole point of the sale is a “bonus” or “illustration” that assumes I hold to the very last year of a ten-year schedule I will not actually meet.
The uncomfortable truth: the annuity you fear is not the annuity you can buy
Most of the “annuities are a scam” content you have read is describing the wrong product. It is describing the variable annuity and the fixed indexed annuity with riders — the ones with the M&E fees, the caps and participation rates, and the seven-to-ten-year surrender schedules, where a 2% annual fee structure really does eat the returns over time. That criticism is fair. But the plain MYGA — just a guaranteed fixed rate, tax-deferred, no market exposure, no recurring fee — is not that product, and it is the one that competes with a CD and a Treasury on a risk-adjusted basis.
And here is the part the industry does not advertise: the plain MYGA is the annuity with the least reason to be sold aggressively, because it has no riders to attach and no recurring commission to collect. The products agents are most incentivized to push are the expensive ones. So when someone hands you a “fixed annuity” and the rate sheet is a 40-page document with caps, participation rates, and a rider menu, you are almost certainly not looking at the cheap, clean MYGA anymore — you are looking at the product the commission structure rewards. The cleanest version of this instrument is the one you have to specifically ask for, the one most rate boards bury below the indexed and variable products that make the agency more money.
How I would build it on a real $100,000 (the numbers, not the brochure)
If I had $100,000 of after-tax money I was confident I would not touch for seven years, this is what I would do in my own accounts. Pull the live MYGA rate board for my state and filter to carriers rated A- or better. Convert every simple-interest rate to its compound equivalent so I am comparing compound to compound. Pick the highest compound rate in the A- to A+ band — in the numbers I priced, a 5-year at about 5.85% to 6.05% or a 7-year at roughly 5.8% to 6.3%, matching my actual horizon. Confirm the free-withdrawal rider gives me at least 10% penalty-free access in the first one to two years. Check the state guaranty association limit and make sure my amount is covered. Then compare the after-tax five-year result against a Treasury ladder and a CD ladder in the same account, and only proceed if the deferral plus the spread still wins.
If the term I need is five years or less, I would not do it — the surrender schedule is not worth the spread, and I would use the Treasury ladder instead. If the term is seven years or more and the size is $100,000 or more, the MYGA from an A- or better carrier is a genuinely strong, boring, and defensible place for that money in the 2026 rate environment. Waiting for a “better deal” is a real risk, because these rates are this high only because short-term rates are high, and that is not going back to 2021. The decision is not “annuity or not.” It is “which of these three safe, locked, fixed instruments matches the exact year I need the money” — and for a seven-year horizon in a taxable account, the clean MYGA is the one that wins the math.
Frequently Asked Questions
Is a fixed annuity the same thing as a CD?
No. A MYGA is an insurance contract that pays a guaranteed rate for a term, and it is tax-deferred, but it is not FDIC-insured — your protection is the insurer’s general account plus your state guaranty association, not the federal government. A CD is a bank deposit, FDIC-insured to $250,000 per bank, fully taxable every year, and much more liquid. They are close cousins, but the tax treatment, the security backstop, and the surrender schedule are all different.
What is a good fixed annuity rate in 2026?
As of early October 2026, a competitive five-year MYGA from an A-rated-or-better carrier runs roughly 5.80% to 6.00% compounded, and the top of the board reaches 6.45% to 6.95% but that is usually a lower-rated carrier or a simple-interest quote. A good rate beats what the same guaranteed term earns at a CD or Treasury of the same length, from an insurer you are comfortable holding for the full term. Compare the compound number, not the headline.
Do I have to pay a fee to buy a fixed annuity?
You should not see a direct fee on a plain MYGA. The agent’s commission — typically 4% to 8% of the premium — is paid by the carrier, not you, and is baked into the rate spread rather than charged as a line item. The fees to watch for are the ones on other annuity types: mortality-and-expense charges of 0.60% to 1.40% per year and rider fees on variable and fixed indexed annuities, plus the surrender charge if you withdraw early. If your “fixed annuity” quote has an annual percentage fee, you are looking at a different product than the plain MYGA.
How long is the money locked up?
Typically the surrender charge schedule runs seven to ten years, starting around 10% in year one and stepping down to zero. Many contracts include a free-withdrawal allowance — commonly 10% of the balance in the first year and 5% in later years — that you can access without a penalty. Match the term to the year you will actually need the money, and never treat a seven-year surrender schedule as a five-year commitment.
Is an annuity right for my emergency fund?
No. An emergency fund needs to be liquid and safe, and the surrender charge schedule makes a MYGA the wrong tool for money you might need next month. A high-yield savings account or a short-term Treasury ladder is the right place for an emergency fund. Save the MYGA for money you will not touch for the full term.
This is general information, not financial advice. Rates, commissions, surrender schedules, and carrier ratings change frequently and vary by state, so verify any specific contract against live carrier rate sheets and your state’s guaranty association limits before acting. Consult a licensed professional about your situation.
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