Now you know more about the pros and cons of CD vs. high-yield savings accounts, here’s a closer look at the differences between a CD and a savings account. Either can be the right choice in some situations, and you may even want to utilize both accounts to make the most of your money.
A CD account is the better choice if you’re sure you won’t need the funds for a period of time and believe market interest rates will stay the same or decrease. If you’re shopping for accounts and encounter a high-yield CD, you may want to know, what is a high-yield CD? A high-yield CD is any CD with an above-average interest rate.
A high-yield savings account is likely better for your needs when you may need the cash sooner or think interest rates could increase. When comparing CD rates vs. savings accounts, you may find CD rates are a little higher. But if you’ll have to pay a penalty to get your funds out early, slightly higher CD rates vs. savings account rates are not worth the risk.
In both cases, your funds are secure. In the U.S., CDs and high-yield savings accounts are insured by the FDIC. Your funds are secure up to $250,000 per depositor per financial institution, guaranteed to be returned even if the bank goes out of business.1