CD vs. high-yield savings account: How to choose what’s right for you

Understanding the key differences and finding the best fit for your savings goals

If you’re looking for a safe place to grow your savings, you might be deciding between a certificate of deposit (CD) and a high-yield savings account. Both can help you earn interest while keeping your money secure, but they work a little differently.

Here’s how to think through which one might fit your needs best.

When a CD might be a good fit

A CD  is a type of savings account where you agree to deposit a set amount of money for a fixed period of time. This could be several months or even a few years. In return, your interest rate is locked in for the entire term.

Because you commit to leaving the money in until the CD matures, it’s best for funds you know you won’t need right away. For example, if you’re saving for a down payment, a big purchase, or a future expenseyou’ve planned. The fixed rate means your earnings won’t change if interest rates in the market go down, giving you predictable growth.

The trade-off is that accessing your money before the term ends usually comes with penalties, so it’s not the best choice for emergency savings or expenses you can’t fully predict.

Unsure of what term you should choose for a CD? Gain insights about a one-year vs. five-year CD.

When a high-yield savings account might make sense

A high-yield savings account works much like a regular savings account, but it typically pays more interest than a standard one. You can deposit or withdraw money at any time without a penalty, which makes it a flexible home for your cash.

Because there’s no set term, high-yield savings accounts are ideal for money you might need sooner. Like your emergency fund, travel savings, or funds for near-term goals. You can also build your balance gradually by adding deposits over time.

One thing to keep in mind: the interest rate can change over time, so your earnings may go up or down with market conditions.

How to decide at a glance

Think about your goals, your timeline, and how much access you need to your money.

• Choose a CD if you want a fixed, predictable rate and are confident you won’t need the money until the term ends
• Choose a high-yield savings account if you value flexibility, want to make ongoing deposits, and may need access to your funds on short notice

Whichever you choose, you’re taking a positive step toward growing your savings and keeping your money safe. The “best” option is the one that works with your life and your goals right now.

Need extra guidance? We are here for you.