CD Review Product: Structured / Market-Linked CD Issuers: Wells, JPM, Citi, HSBC, GS, Barclays Last updated: 2026-06-27

Structured CD Review (2026) — Market-Linked CDs Explained Honestly

Item: Structured CD (Market-Linked CD)
Rating: 2.5
Author: Hans Goldstein

Quick take: Structured CDs (also called market-linked CDs or index-linked CDs) are FDIC-insured certificates of deposit whose return is tied to the S&P 500 or a basket of stocks. The pitch is irresistible: "FDIC protection + stock market upside." The reality is that caps, participation rates, averaging methods, and OID tax usually cost you 30-50% of any rally — and zero if the index doesn't cooperate. For nearly every retiree shopping these against a 5.40-5.65% MYGA, the MYGA wins on the math.

TL;DR

What it is: An FDIC-insured CD with a payoff tied to an equity index. 3-7 year terms. Principal back at maturity even if index drops.
The catch: 60-80% participation rate, averaging method on the index, 2-5% baked-in structuring fee, and annual OID tax on phantom income.
Liquidity: No real secondary market. Bank buyback at 85-90 cents on the dollar in early years.
Real upside in a 12%/yr 5-year rally: roughly 43% net of fees — vs ~31% guaranteed in a 5.50% MYGA. The marginal upside is not worth the conditionality for most retirees.
Real downside in a flat or negative market: 0% credited interest while inflation eats your real value. A MYGA would have paid 5.50% in the same window.
Who structured CDs make sense for: A small minority of investors who already have a fully-funded floor, want tactical equity exposure with hard principal protection, can absorb the OID tax in a tax-advantaged account, and won't need liquidity.

What is a structured CD?

A structured CD is a hybrid of two ingredients:

A zero-coupon bond deep enough to grow back to your face value at maturity. This is what funds FDIC protection on the principal.
An option budget — whatever interest you would have earned in a plain CD is instead spent buying call options on the S&P 500 (or basket).

The bank assembles these two pieces, wraps them in a CD format, sells you the wrapper, and keeps a structuring fee. The most common formats:

Wells Fargo Market Linked CDs — typically 5-7 year terms, 65-75% participation rate on the S&P 500, point-to-point or averaging method.
JPMorgan Market Linked Certificates of Deposit — 3-7 year terms, capped upside (e.g. 35-50% maximum total return), sometimes with averaging.
Citi Equity-Linked CDs — basket structures (e.g. 10 dividend stocks), 5-year terms, participation rates 60-80%.
HSBC Index-Linked CDs — international index baskets common, 3-5 year terms.
Goldman Sachs (Marcus) and Barclays — periodic offerings via wirehouses, similar mechanics.

All of them advertise the same headline: FDIC up to $250K, principal protection, stock market participation. None of them lead with the participation rate, the averaging mechanism, or the OID treatment.

How they're priced (the fee math)

Banks don't issue structured CDs to give you free money. The economics break down like this on a hypothetical 5-year, $100,000 structured CD:

Component	$ Value	Notes
Zero-coupon bond to grow to $100K in 5 yrs at 4.5%	~$80,200	FDIC-insured principal protection mechanism
Option budget for S&P 500 calls	~$15,800	What's left after the bond purchase, minus fees
Bank structuring fee (typically 2-5%)	~$4,000	Embedded — never shown on the term sheet
Total of components	$100,000	Your purchase price

The $15,800 option budget buys a limited amount of S&P upside. That's why your participation rate maxes out at 60-80% — the option budget can't afford to deliver 100% participation. The bank fee is the most expensive component of the entire wrapper and it never appears as a line item.

The 4 issuers writing 95% of these

Wells Fargo — the most aggressive marketer of Market Linked CDs to retail. Long-running program. Typical structure: 5-7 years, point-to-point S&P 500 with averaging in the final year, 65-75% participation, 5-7% structuring spread.
JPMorgan Chase — sold primarily via Chase Private Client. Heavy use of capped-upside structures (max return 40-50% over the term). Tax-document quality is the best of the issuers.
Citi — basket-of-stocks specialist. Common structure: 5-year, 10 dividend payers, 60-70% participation. Past structures have used "worst-of" rules that pay based on the WORST performing basket member.
HSBC — international index focus (FTSE, EuroStoxx, Nikkei). Sold via private banking. Currency risk often hidden in structure.
Goldman Sachs (Marcus retail brand) and Barclays — periodic offerings, typically distributed via wirehouse advisors with sales charges.

None of these banks publish standardized comparison data. You almost always need to read the prospectus and the term sheet line by line.

The averaging method that eats your upside

This is the single most misunderstood feature of structured CDs.

Point-to-point credits return based on the index level at maturity vs the level at issue. Simple math.

Averaging method credits return based on the AVERAGE of monthly or quarterly closes during the contract term. In a rising market, this destroys upside.

Worked example: S&P 500 starts at 5,000 and rises linearly to 8,000 over 5 years (60% gain).

Point-to-point return = 60%. With 70% participation = 42% credited.
Averaging return (60 monthly closes averaged) ≈ 30%. With 70% participation = 21% credited.

Averaging cut the credited return in half on the same rally. Almost every structured CD term sheet sold to retail uses averaging in the final year — and the agent never explains why.

The OID tax trap

This is the silent killer of structured CDs in taxable accounts.

IRS Publication 1212 ("Guide to Original Issue Discount Instruments") classifies most structured CDs as contingent payment debt instruments. The tax consequence:

You are taxed each year on a comparable yield imputed by the issuer (often 4-7% annually).
You receive zero cash during the term — all return is paid at maturity.
If the actual payout at maturity is LESS than what you've already been taxed on, you get an ordinary loss to offset earlier income. If it's MORE, the excess is ordinary income at maturity.

This means you pay tax every year on income you don't have. In a taxable brokerage account, this is brutal. In an IRA or 401(k), it's irrelevant because the wrapper defers all tax — which is why structured CDs are pitched almost exclusively into retirement accounts (and even then, you're trading away the better tax-deferred alternative: a MYGA).

Real-world example math

Scenario: $100,000 invested in a Wells Fargo 5-year Market-Linked CD on the S&P 500. Terms: 75% participation, point-to-point with last-year averaging, 3.5% baked-in structuring spread.

S&P 500 Scenario (5-yr)	Structured CD Payout	5-yr MYGA at 5.50%	Winner
+12% annualized (S&P returns 76% total)	~$143,000 (43% net)	$130,696 (31%)	Structured CD by ~$12K
+8% annualized (S&P returns 47% total)	~$127,000 (27% net)	$130,696 (31%)	MYGA by ~$3K
+4% annualized (S&P returns 22% total)	~$112,000 (12% net)	$130,696 (31%)	MYGA by ~$19K
Flat (S&P returns 0%)	$100,000 (0%)	$130,696 (31%)	MYGA by ~$31K
-20% then recovers to flat	$100,000 (0%)	$130,696 (31%)	MYGA by ~$31K

Structured CD only wins in the highest scenario — the kind of 5-year run that has happened maybe 30% of historical periods. In the other 70%, the MYGA's certainty wins. And those numbers assume the structured CD has NO averaging penalty. With averaging in the final year (which most do), the "structured CD wins" cell narrows further.

When structured CDs actually work (rare)

There is a small slice of buyers for whom structured CDs are reasonable:

You hold them in an IRA or qualified plan (sidesteps OID tax pain).
You already have a fully-funded retirement income floor from Social Security, pension, and MYGAs/SPIAs covering essential expenses.
You want a tactical equity overlay with hard principal protection (e.g., "I want some S&P exposure but cannot lose this $250K").
You will absolutely hold to maturity and have no need for liquidity during the term.
You understand the participation rate and averaging mechanism and accept the conditional payoff.

For most retirees, this isn't the situation. Most retirees need yield certainty more than they need conditional equity upside.

When MYGAs crush them (usually)

The MYGA value proposition vs structured CD:

Certainty: 5.40-5.65% locked for 3-10 years vs 0-46% conditional.
Taxation: Tax-deferred until withdrawal (no OID phantom income).
Liquidity: 10% annual free withdrawal (most carriers) vs no secondary market.
Backing: A-rated carrier reserve + state guaranty fund (typically $250K) vs FDIC ($250K).
Renewal: At MYGA maturity, you can roll into a new MYGA via §1035 with no tax event. CDs require taxable distribution + new purchase.

The honest comparison framework: Annuity vs CD Calculator shows the after-tax break-even point at any rate, term, and bracket.

Bottom line

Structured CDs are a sophisticated product designed to sound safer than they perform. The FDIC label is real on the principal, but the structure costs you 30-50% of any market rally and pays you nothing if the market doesn't cooperate. The OID tax on phantom income makes them painful in taxable accounts. The lack of a secondary market makes early exit costly.

For nearly every retiree shopping these against a current MYGA at 5.40-5.65%, the MYGA's certain, tax-deferred return wins on the math 7 times out of 10. If you've been quoted a structured CD, get a second opinion before you sign.

Get a second opinion on your structured CD quote

Independent review. No carrier ties. Hans.

Structured CDs are sold by every major bank and rarely understood by the buyer. Before you commit $100K+ to a 5-7 year wrapper with conditional payoff and OID tax, get a side-by-side comparison vs the current top-of-market MYGA at the same term.

Drop your info — within 24 hours you'll get a written breakdown of your specific structured CD term sheet, a MYGA comparison at the same term, and a 15-minute call if you want one.

Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed insurance producer

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Frequently Asked Questions

Are structured CDs FDIC insured?

Yes — the PRINCIPAL of a structured CD is FDIC insured up to $250,000 per depositor per bank. But FDIC only covers the principal at maturity, not any expected interest. If the index goes nowhere, your $250K just sits at $250K and you got zero return for 5-7 years.

Why are structured CD caps so low?

The bank uses your principal to buy bonds (funding FDIC-insured principal protection) and uses the leftover yield to buy index call options. The option budget is small, so they cap your participation at 60-80% to make the math work — plus they bake in a 2-5% structuring fee.

What is OID tax on a structured CD?

Original Issue Discount. The IRS taxes structured CDs annually on imputed interest even though you receive no cash. Per IRS Publication 1212, you pay tax each year on a phantom yield, then receive the actual return (which may be zero or huge) at maturity. This is brutal in taxable accounts.

Can I sell a structured CD before maturity?

There is no real secondary market for retail buyers. The issuing bank may quote a buyback price, typically 80-90 cents on the dollar in years 1-4. You lose 10-20% of principal if you exit early. See our explainer on the 80-cent liquidation problem.

Structured CD vs MYGA — which wins?

For most retirees, MYGA wins. A 5-year MYGA at 5.50% guarantees $32K of growth on $100K. A 5-year structured CD might give you $43K if the market cooperates perfectly — or $0 if it doesn't. The MYGA's certainty almost always beats the structured CD's conditional upside.

What is averaging method and why does it hurt?

Averaging method calculates index return as the AVERAGE of monthly or quarterly closes rather than point-to-point. In a rising market, averaging cuts your return roughly in half because early closes are weighted equally with later (higher) closes. A 60% participation rate with averaging often translates to ~30% of actual index return.

Which banks issue structured CDs?

The big 6 issuers writing 95% of retail structured CDs: Wells Fargo, JPMorgan Chase, Citi, HSBC, Goldman Sachs (Marcus), and Barclays. All are FDIC-insured banks. Structures and caps vary by bank and program.

Can I roll a structured CD into a MYGA?

Yes — at maturity, the proceeds are cash and you can move them into a MYGA, IRA annuity, or any other vehicle. There is no §1035 mechanism for CDs (those are bank deposits, not annuities), so the move is straightforward: matured CD → bank account → MYGA application.

About Hans Goldstein: Independent retirement income specialist. CA Life License #4163961. NPN #20602398. Reviews 30+ annuity carriers and the full bank-product landscape. Phone: 213-414-2808. Email: hans@goldsteinco.net.

Disclosure

This review reflects publicly available product materials, prospectuses, and term sheets approximate as of the date stated above. Structured CD participation rates, caps, averaging methods, and structuring fees change with every new issue — typically monthly or per offering. Always confirm current values against the most recent term sheet and prospectus before purchasing. This article is general information for educational purposes; it is not a personalized recommendation, solicitation, or offer of any specific product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated annuity carriers; he does not sell bank-issued CDs or structured CDs and receives no compensation from any bank in connection with this review. No compensation has been received from any carrier or bank in connection with the publication of this review. Always read the actual prospectus, term sheet, and disclosure document and consult a licensed advisor before purchasing any structured CD, annuity, or long-term care insurance product. Past index performance does not predict future credited interest. FDIC coverage applies to the principal of structured CDs but does not guarantee any specific rate of return. Tax treatment under IRS Publication 1212 reflects law as of 2026 and is subject to change.