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CDs vs. High-Yield Savings Accounts: Pros, Cons, and Why I Personally Use Both

Updated
Brooklyn Sprunger
Author: Brooklyn Sprunger
Brooklyn Sprunger
Brooklyn Sprunger
Content Manager

Brooklyn Sprunger is a full-time Content Manager and Personal Finance Writer at Motley Fool Money, where she oversees product reviews and ratings while also writing about credit cards, bank accounts, investing, auto insurance, and other personal finance topics. She has worked in financial content since 2018, including more than four years at The Motley Fool. When she’s not writing or editing, Brooklyn is likely hiking and watching the Tennessee Vols.

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Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures that our product ratings are not influenced by compensation. APY = Annual Percentage Yield.

I've had both a high-yield savings account (HYSA) and a certificate of deposit (CD) for a few years now. But I love them for different reasons, and I use them for different purposes.

I park my emergency fund and short-term savings I might need to access quickly in my high-yield savings account. My certificate of deposit, on the other hand, is where I stash cash I know I won't need for a while. In fact, my 10-month CD is just about to mature. It earns a higher rate, and I'm not tempted to dip into it.

If you’re deciding between a CD vs. a high-yield savings account, I'll break down how they compare and how to know which one fits your goals.

What's a high-yield savings account?

A high-yield savings account is a savings account that earns a much higher interest rate than traditional bank accounts. Its best trait is flexibility: You can deposit or withdraw funds anytime, and many accounts come with no monthly fees.

What it's good for:

Why I use it: I like the peace of mind that I can access my money whenever I want, but I still earn interest while it sits. It's less risky than investing the money and earns so much more interest than a regular savings account.

Compare savings rates

Make sure you're getting the best account for you by comparing savings rates and promotions. Here are some of our favorite high-yield savings accounts to consider.

Account APY Bonus Next Steps
up to 4.00%
Rate info Circle with letter I in it. Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.30% APY as of 12/23/25) for up to 6 months. Open a new SoFi Checking and Savings account and pay the $10 SoFi Plus subscription every 30 days OR receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 3/30/26. Rates variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
Min. to earn: $0
Earn $50 or $400 and +0.70% Boost on Savings APY with direct deposit. Terms apply. Circle with letter I in it.

Earn up to 4.00% Annual Percentage Yield (APY) on SoFi Savings with a 0.70% APY Boost (added to the 3.30% APY as of 12/23/25) for up to 6 months. Open a new SoFi Checking and Savings account and pay the $10 SoFi Plus subscription every 30 days OR receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 3/30/26. Rates variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
up to 4.10%*
Rate info Circle with letter I in it. 4.10%* APY for balances of $5,000 or more; otherwise, 0.60%* APY
Min. to earn: $5,000
Earn up to 4.10% APY with promo code CITBoost Circle with letter I in it.

With the 6 month Boost limited-time offer, you earn 4.10%* APY on balances over $5,000 (balances less than $5,000 earn 0.60%* APY). After the boost is complete you will continue to earn standard rates-- 3.75% APY for balances over $5,000 (balances less than $5,000 earn 0.25% APY). The minimum to open a Platinum Savings account is $100. Member FDIC. No monthly service fees.
3.80%
Rate info Circle with letter I in it. The annual percentage yield (APY) is accurate as of January 8, 2026 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.
Min. to earn: $500 to open, $0.01 for max APY
N/A
Disclaimers

The annual percentage yield (APY) is accurate as of January 8, 2026 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.

Accurate as of the time of publication. The national average rate referenced is from the FDIC’s published National Rates and Rate Caps for Savings deposit products, accurate as of March 16, 2026. See the FDIC website for more information.

Platinum Savings is a tiered interest rate account. Interest is paid on the entire account balance based on the interest rate and APY in effect that day for the balance tier associated with the end-of-day account balance. APYs — Annual Percentage Yields are accurate as of January 9, 2026: 0.25% APY on balances of $0.01 to $4,999.99; 3.75% APY on balances of $5,000.00 or more. Interest Rates for the Platinum Savings account are variable and may change at any time without notice. The minimum to open a Platinum Savings account is $100.

Based on comparison to the national average Annual Percentage Yield (APY) on savings accounts as published in the FDIC National Rates and Rate Caps, accurate as of February 17, 2026.

* Platinum Savings APY Boost Promotion Terms and Conditions

This is a limited time offer available to New and Existing customers who meet the Platinum Savings APY Boost promotion criteria.

Accounts enrolled in the Platinum Savings Annual Percentage Yield (APY) Boost promotion will receive a 0.35% APY boost on the Platinum Savings current standard APY tiers for 6 months following the opening of a new account or when an existing Platinum Savings account is enrolled in the promotion. The Platinum Savings APY boost will be applied on account balances up to $9,999,999.00. Account balances above $9,999,999.00 will earn the standard APY. If the standard-published APY should change during the promotion period, the APY boost will move with it, offering an account APY above the standard rate.

The Promotion begins on February 13, 2026, and ends April 13, 2026. Customers enrolled in the promotion prior to the end date will receive the APY boost for the 6-month period outlined in the terms and conditions.

The promotion can end at any time without notice.

For complete list of account details and fees, see our Personal Account disclosures.

CIT General Disclosures

CIT updates the multiplier information based on the FDIC National Rates. The FDIC publishes their rate on the third Monday of each month (always will be their effective date) and CIT updates its site by the end of that week.

CIT updates its APY disclosure only when there is a rate change (increases or decreases)

For complete list of account details and fees, see our Personal Account disclosures. https://cit-fcb-t.cit.com/cit-bank/resources/forms

What's a CD?

A certificate of deposit locks your money in for a set amount of time -- usually anywhere from 6 months to 5 years. In exchange, you get a guaranteed interest rate that typically beats what HYSAs offer (I locked in a 5.20% APY in my CD while my HYSA dropped to 4.40% APY). The catch is that you'll pay a penalty if you withdraw the money early.

What it's good for:

  • Savings you won't need for a while
  • Earning a higher return on idle cash
  • Avoiding the temptation to spend

Why I use it: I like using CDs for savings goals that are six to 12 months out -- like a future move or big home project. I know I won't touch the money, so I might as well earn more on it.

Compare top CDs

Rates as of Feb. 20, 2026
Western Alliance Bank CD

Western Alliance Bank CD

APY:
4.00%
Term:
3 Months
Min. Deposit:
$1
Open Account for

On Raisin's Secure Website.

LendingClub CD

LendingClub CD

Member FDIC.
APY:
4.10%
Term:
8 Months
Min. Deposit:
$500
Read Review
Synchrony Online CD

Synchrony Online CD

Member FDIC.
APY:
4.10%
Term:
14 Months
Min. Deposit:
$0
Open Account for

On Synchrony Bank's Secure Website.

How HYSA and CD rates are determined

Both CD and savings rates are closely tied to the Federal Reserve’s interest rate decisions.

When the Fed raises rates, banks usually respond by increasing APYs on savings accounts and CDs. When rates fall, variable savings rates often follow, while CDs keep paying the rate you locked in.

Banks also adjust rates based on their own needs. Online banks, in particular, tend to offer higher yields to attract deposits.

Bottom line: Rates can change anytime, but CDs offer certainty. If you see a strong CD rate that fits your timeline, locking it in can make sense.

CD vs. HYSA: Side-by-side comparison

Feature High-Yield Savings Account Certificate of Deposit
Interest rate Competitive, but variable Often higher, and fixed
Access to funds Anytime Locked in for a term
Withdrawal penalties None Usually applies
FDIC insured Yes Yes
Best for Flexible savings Committed savings

Note: Both HYSAs and CDs are FDIC insured up to $250,000 per depositor. That means your money is protected even if the bank fails.

Taxes on CDs and savings accounts

Whether you're earning interest on a CD or a HYSA, the IRS still wants a cut. You'll owe income tax on the interest you earn -- even if you don't withdraw it. It's usually reported on a 1099-INT form at tax time.

Can you lose money in a CD or HYSA?

Nope, that's the beauty of both of these savings strategies. As long as you stay under the FDIC insurance limit ($250,000 per bank, per person), your money's safe. These are both low-risk ways to grow your savings.

How to choose between a CD and HYSA

If you're not sure which account to open, ask yourself one question: Will I need to access this money in the next six to 12 months?

  • If yes, go with a high-yield savings account. You'll earn interest without tying your hands.
  • If no, a CD could earn you more. Just be sure to get one for a term that makes sense for you.

When it makes sense to have both

Honestly, I think having both a HYSA and a CD is one of the smartest money moves you can make, and that's exactly what I do.

A high-yield savings account gives you the flexibility to cover surprise expenses or move quickly on last-minute plans (like when I found a flight deal I couldn't pass up). But a CD helps you earn more on money you don't need right away -- and keeps it out of sight, out of mind.

It makes sense to have both if:

  • You want a clear separation between short- and long-term savings
  • You're trying to resist the urge to dip into certain funds
  • You want to earn more without taking on any market risk
  • You've already got your emergency fund covered and are looking for your next best savings move

For me, the combo gives structure to my savings. My HYSA is for flexibility; my CD is for focus. And together, they help me make the most of my money.

Final thoughts

There's no one-size-fits-all answer here. Both HYSAs and CDs are smart, low-risk places to grow your money. It just depends on how hands-off you want to be -- and how soon you might need your cash.

Personally, I like the balance of having both: quick access when I need it, and better returns when I don't.

If you're thinking about opening an account, we've rounded up the best high-yield savings accounts and top-paying CDs available today. Compare rates, terms, and features to find the right fit for your goals.

FAQs

  • Not necessarily -- it just depends on your goals. CDs usually pay more, but you'll have to lock in your money. HYSAs are better if you want flexibility.

  • You'll usually pay a penalty, like a few months' worth of interest. That's why I only use CDs for cash I know I won't need until later.

  • You could, but you might miss out on strong rates now. I'd rather lock in a solid return today than gamble on what the Fed might do next.