3 Unexpected Benefits of Choosing CDs Over Other Savings Accounts

Both high-yield savings accounts (HYSAs) and certificates of deposit (CDs) are low-risk, interest-bearing assets. And right now, you can find top banks paying around 3.50%-4.00% APY on either of these savings products.

CDs might earn you slightly higher interest in 2026 if rates keep falling as many predict. But there are a few other "hidden" perks to CDs that you might not fully appreciate.

Here are a few features of CDs to keep in mind as you're deciding where to put your savings.

1. You can access the interest during the term

A common myth with CDs is that your money is totally off-limits until the maturity date.

While it's true you usually can't touch your initial deposit without paying a penalty, many banks actually let you withdraw the interest you earn as you go.

For example, if you put $10,000 into a 5-year CD at a 3.50% APY, you'd earn $350 in interest in the first year. Some banks -- like LendingClub or Barclays -- allow you to take that $350 out as monthly dividends and spend it if you choose.

This is a popular move for retirees who want a steady, predictable "paycheck" from their savings. You can always leave the interest in the account to grow, but it's nice to know the option to cash out is there.

See today's best CD rates and find a bank that fits your income needs.

2. You can buy CDs inside a retirement account

Usually, the interest you earn from a CD is taxable. However, many top brokers (like Vanguard) allow you to buy CDs inside an individual retirement account (IRA).

By doing this, you get the stability of a CD without the immediate tax bill.

Remember that you generally can't take money out of an IRA before age 59 1/2 without a penalty, so this isn't the right move for everyone. But if you're looking for conservative options outside of bonds and cash options, it's a smart way to get risk-free growth.

3. You can "pre-set" your exit strategy

One of the biggest headaches with CDs is the "auto-renewal." If you forget your maturity date, many banks will automatically roll your money into a new CD -- sometimes at a much lower rate.

But some modern banks these days allow you to choose your maturity instructions way in advance. In fact, some let you choose your exit strategy the day you set up the CD, and allow you to change your mind anytime as a mobile app feature.

Instead of defaulting to a renewal, you can set it to "auto-cash out," where your principal and interest are automatically put back to a linked checking or savings account when the CD term ends. It's a great way to "set it and forget it" without worrying about your money getting trapped in a low-earning account later.

Is a CD right for you?

If you need instant access to your money anytime, a high-yield savings account is probably the best spot to store your cash. No lock-ins, no penalties, and still earning a great APY right now.

But if you want to squeeze a bit more interest out of your cash, and you're comfortable not touching your money for a set term, a CD can make sense.

Check out today's top CD rates here to see which one wins for your wallet.