6-Month or 5-Year CDs: Which Are Better in August 2025?

CDs shine when the economy feels unpredictable (e.g. right now!). You can snag guaranteed returns in the 4.00% APY range and ignore all the noise from Wall Street, Fed chatter, and dramatic headlines.

The only real question is: how long do you want to tie up your money?

Let's weigh the pros and cons of 6-month vs. 5-year CDs -- plus a third option that might surprise you.

Rate comparison: 6-month vs. 5-year CDs

Here's a quick snapshot of the top CD rates in August 2025:

• Top 6-month CDs: Around 4.20% APY
• Top 5-year CDs: Roughly 3.75% APY

To put that into dollars, if you invested $10,000 in a 6-month CD today, you'd earn about $210 by maturity.

But stick that same $10,000 into a 5-year CD and you'd pocket roughly $2,010 over the full term.

The real wildcard is where rates go next. If the Fed starts cutting rates soon (that's what many experts are predicting will happen in September) then chasing short-term CDs over and over may not pay off.

In that case, a lower-yielding 5-year CD could actually leave you ahead in the long run.

Of course, you don't have to choose one or the other. Splitting money between short- and long-term CDs (aka "CD laddering") is a common way to hedge your bets.

When a 6-month CD makes sense

Short-term CDs are all about flexibility. Your cash is tied up for just half a year, which means you can pivot quickly when rates shift or new opportunities pop up.

Plus, 6-month CDs are offering some of the highest yields in the CD world right now.

The downside is early next year when your CD matures, what's the next play? If you already know you'll likely roll into another CD term, you're kind of rolling the dice on where rates stand at that time.

A 6-month CD might be smart if you:

• Know you'll likely need access to your money within the next year
• Want to lock in one of the highest available APYs
• Think rates might climb even higher before they fall

When a 5-year CD makes sense

If you've got money you won't need for several years, and you want a guaranteed return, a 5-year CD can be a good spot.

You won't have to worry about investment risks, and if the Fed drops rates and CD yields fall over the next few years, you'll be glad you secured today's top APYs.

The catch, of course, is the commitment. Pulling out early usually means paying a penalty that eats into your interest.

A 5-year CD could be a smart fit if you:

• Have cash you won't need until at least 2030
• Prefer steady, predictable returns
• Believe interest rates are headed lower soon, and will continue to drop or stay low for many years.

Ready to lock in for the long haul? See the best 5-year CD rates available today.

The flexible option: High-yield savings

Not ready to lock your money up for six months (or five years)? A high-yield savings account (HYSA) might be the sweet spot.

Right now, top HYSAs are paying between 3.80 and 4.20%. Some even have limited-time offers or added incentives that boost the effective yield to 4.50% APY.

And since your money isn't tied down, you can move it in or out whenever life calls for it.

Sure, rates can dip at any time. But that's the trade-off for total flexibility. If you're still deciding your next move, an HYSA lets your cash grow while staying within arm's reach.