Choosing between a high-yield savings account and a certificate of deposit (CD) can be tricky, but there’s no rule that says you can’t take advantage of both account types.
High-yield savings account vs. CD
A high-yield savings account, or HYSA, is a savings account featuring a high interest rate. On average, standard savings accounts earn 0.41%, whereas high-yield options can have interest rates around 4% to 5%. Savings accounts don’t come with spending abilities but are FDIC- or NCUA-insured, as they are deposit accounts.
CDs, sometimes called share certificates, are insured deposit accounts just like savings accounts. You open one with a minimum deposit, such as $1,000, and can’t make additional deposits. You earn a fixed interest rate over a set term, often between three months and 10 years.
Do CDs or HYSAs have higher interest rates?
In general, CDs tend to offer higher interest rates than a typical savings account. Here are some of the average reported interest rates for CDs compared to savings accounts in 2025:
- Savings accounts: 0.41%
- 1-month CD: 0.25%
- 3-month CD: 1.43%
- 6-month CD: 1.61%
- 12-month CD: 1.78%
As you can see, long-term CDs tend to get better interest rates than shorter CDs. Since long-term CDs lock your funds away for longer, banks entice customers with higher rates in exchange.
Fixed rates vs. variable interest rates
Most CDs have fixed interest rates, simply meaning your rate will not change over the CD’s term. You’re guaranteed to earn the rate you got when you opened the account, as long as you don’t close the account prematurely.
Savings accounts, however, have variable interest rates, so the bank could lower your rate at any time. A variable rate can be a good or bad thing, since the bank could increase or decrease your interest rate based on market conditions.
Savings vs. CDs withdrawal limitations
Most savings and CDs have withdrawal limitations, but how they work is entirely different.
CDs have early withdrawal penalties, often in the form of interest earnings. For example, a 12-month CD may have an early withdrawal penalty of three months of earned interest. And if you withdraw all of your CD’s funds, the account closes.
Savings accounts are more accessible, allowing you to make ACH transfers or ATM withdrawals if you need to access the cash. Savings accounts typically allow up to six withdrawals per month, though there are many online savings accounts without any withdrawal penalties. Unlike CDs, a savings account typically won’t close if you withdraw all the funds, and you won’t lose already-earned interest for withdrawing.
So, which is better: CD or HYSA?
Open a HYSA if:
- You want the ability to withdraw money
- You want to add funds whenever you want
- You’re building an emergency fund
- You’re building sinking funds
Open a CD if:
- You want to earn a guaranteed interest rate
- You don’t need to access the funds for months at a time
- You already have an emergency fund
- You have at least $1,000 to meet minimum deposit requirements
Bottom line: You can have both
Savings accounts are better for everyday and accessible savings, while CDs tend to be better for long-term growth.
CDs have fixed rates, which can be great if you think interest rates are going to drop, because once the account is opened, you’ve locked in the rate. However, once the CD is open, withdrawing funds means getting hit with penalties or closing the account altogether. For everyday savings and the ability to add funds as time goes on, go with a HYSA to grow your savings while still earning interest.
