What is the difference between an annuity and a Certificate of Deposit (CD)? A Certificate of Deposit (CD) is an interest-bearing account with rates that you can lock in for a given period of time. An annuity is very similar in that you can guarantee a particular rate for a given period of time, but there are some primary differences. The primary difference is that interest earned on your money with an annuity is tax-deferred, whereas interest earned with a CD is taxable each year. A CD is issued by a bank or financial institution and is guaranteed by the FDIC. The issuing insurance company guarantees an annuity.