CD Rates Are Over 4%. Here's Why I'm Still Saying No in April 2025

Right now, you can lock in an APY of over 4.00% with a certificate of deposit (CD). Some short-term options, like 6-month CDs, pay 4.50% or more.

That's not bad at all -- so why am I avoiding CDs completely this year?

For me, it's simple: I'd rather build wealth than park my money in an account that barely beats inflation. CDs have their place, but here's why I'm putting my money elsewhere now.

I'm focused on long-term growth -- and CDs don't cut it

Most of my money is invested in stocks through tax-advantaged accounts like my 401(k) and IRA. That's where the real potential is.

Over the past few years, my stock investments have delivered average annual returns of about 9% -- double the return of today's best CDs. Thanks to the power of compound interest, as well as the huge tax breaks offered by 401(k)s and IRAs, I'm on track to retire early.

IRAs are one of the best places to put your long-term savings. In 2025, you can contribute up to $7,000 to a traditional or Roth IRA ($8,000 if you're 50 or older). Your investments grow tax free -- and if you choose a Roth IRA, your qualified withdrawals will be tax free, too.

If you're not sure where to start, think about buying an S&P 500 index fund. You'll own a small piece of 500 top U.S. companies and get in on the market's long-term growth. Historically, the S&P 500 has returned about 10% per year.

That kind of performance can turn small investments into serious wealth. If you're ready to start investing for the long term, click here to see the best IRA brokers and open an account today.

For short-term goals, I stick with a high-yield savings account

I still keep some money in cash for emergencies and short-term needs -- just not in CDs. Instead, I use a high-yield savings account with a competitive APY.

Here's why I prefer savings accounts over CDs:

• No withdrawal penalties. I can access my money anytime without losing interest.
• Flexible deposits. I can set up automatic transfers and add funds whenever I want.
• Easier money management. I can move money between accounts with a couple of taps.

That flexibility makes savings accounts the perfect spot for my emergency fund or near-term expenses. And that convenience is costing me almost nothing in lost interest.

CDs don't fit into my strategy

CDs offer a guaranteed return, but the trade-offs -- like early withdrawal penalties and lackluster growth -- just don't make sense for me.

My money is either:

• Invested in the stock market through a tax-advantaged retirement account, or
• Sitting in a high-yield savings account where it's safe and can be withdrawn at any time.

Sure, I might make a few extra bucks by moving some savings into CDs. But I'd rather keep things simple, flexible, and focused on bigger gains.