HYSA vs CD: Which Is Better?
High-yield savings accounts and certificates of deposit are both safe, FDIC-insured ways to grow your money. But they work differently and suit different goals. Here's how to decide which is right for you.
Current Rates at a Glance
Key Differences
High-Yield Savings Account
- •Variable rate — changes with the market
- •Instant access to your money anytime
- •No early withdrawal penalties
- •No lock-in period
- •Rate can drop if the Fed cuts rates
Certificate of Deposit
- •Fixed rate — guaranteed for the full term
- •Money is locked for the term length
- •Early withdrawal penalty if you cash out early
- •Rate is guaranteed — won't drop during the term
- •May miss out if rates rise after you lock in
When to Choose a HYSA
- •Emergency fund — you need money available at all times for unexpected expenses
- •Need flexibility — you're not sure when you'll need the money
- •Rates are rising — a variable rate lets you benefit as rates increase
- •Short-term goals — saving for a vacation, down payment, or purchase in the next few months
When to Choose a CD
- •Want a guaranteed rate — lock in today's rate so it can't decrease
- •Don't need the money — you have separate funds for emergencies and won't touch this
- •Rates are falling — locking in now protects you from future rate drops
- •Long-term goals with a known timeline — saving for something specific 1–5 years out
The CD Ladder Strategy
Can't decide between a HYSA and CDs? A CD ladder gives you the best of both worlds. You split your money across CDs with staggered maturity dates (e.g., 6-month, 12-month, 18-month, and 24-month terms). As each CD matures, you either use the money or reinvest it into a new longer-term CD.
This strategy provides regular access to a portion of your funds while still earning higher locked-in rates. It also protects you from rate changes in either direction since you're constantly reinvesting at current rates.
Try the CD Ladder CalculatorThe Bottom Line
For most people, a high-yield savings account is better for everyday savings and emergency funds because it offers flexibility and no penalties. You can deposit and withdraw at any time while still earning a competitive rate.
CDs are better when you want to lock in a rate on money you know you won't need for a specific period. They're especially valuable when rates are expected to fall, since your rate is guaranteed for the full term. Many savers benefit from using both — a HYSA for liquid savings and CDs for longer-term goals.
Frequently Asked Questions
Should I put my money in a CD or savings account?
It depends on when you need the money. If you might need it at any time (emergency fund, short-term savings), a high-yield savings account is better because you can withdraw without penalty. If you have money you won't need for a specific period and want a guaranteed rate, a CD can lock in a higher return.
Can I get a better rate with a CD than HYSA?
It depends on the rate environment. Sometimes longer-term CDs offer higher rates than HYSAs, and sometimes HYSAs pay more than short-term CDs. Right now the top HYSA rate is 4.40% APY and the best 12-month CD is 4.65% APY. Compare both before deciding.
What happens if I need my CD money early?
Most banks charge an early withdrawal penalty if you cash out a CD before it matures. The penalty is typically a certain number of months of interest (e.g., 3 to 6 months). Some banks offer no-penalty CDs, but those usually come with lower rates.
Should I have both a HYSA and CDs?
Yes, many savers benefit from having both. Keep your emergency fund and short-term savings in a HYSA for instant access, and use CDs to lock in rates on money you won't need for a known period. A CD ladder strategy can give you the best of both worlds.