Here's What Happens When You Switch From a Savings Account to CDs

Right now, the best CD rates are topping around 4.00% APY. Not bad for a low-risk place to park your cash.

But with the Federal Reserve holding interest rates steady after its January 2026 meeting (and no hikes widely expected until at least mid-year) it's no surprise that more savers are considering other options too.

If you're thinking about shifting your money from a savings account to a CD, here's what you're signing up for.

You lock in a fixed rate

The best part about CDs is once you open one, your interest rate is locked.

It doesn't matter what the Fed does next or how online banks adjust their savings APYs. Your CD's return is guaranteed for the full term -- whether that's six months, a year, or longer.

That kind of certainty can be super appealing, especially when the economy is feeling uncertain and the stock market looking frothy. A lot of savers are worried that if rates drop this summer (which many traders expect), their 4.00% HYSA could fall to 3.50% or lower. With a CD, you can avoid that downside.

For example, if you put $10,000 into a 12-month CD paying 4.25% APY, you'll earn $425 in guaranteed interest -- assuming you leave it untouched until maturity.

Want to peek at today's top rates? Here's a list of today's best CD rates from trusted banks.

But you'll give up easy access to your money

This is where CDs come with a bit of a trade-off.

Unlike a regular savings account, you can't tap into your money whenever you feel like it. If you withdraw from a CD before it matures, you'll likely owe a penalty.

Say your bank charges a six-month interest penalty. If you break a 12-month CD early, that could mean forfeiting most (if not all) of the interest you've earned. And if you pull out too soon, you might even dip into your original deposit.

That's why it's smart to only commit money you're 100% sure you won't need. CDs can be a great place for savings with a known timeline -- like a down payment fund you'll need in 18 months. But they're not a good spot for your emergency fund or everyday buffer.

Don't ditch your savings account just yet

Even if you're excited about locking in a higher rate, you probably still want to keep a regular savings account. It gives you flexibility that CDs simply don't.

• You can move money in and out whenever you want
• Your emergency stash stays liquid
• There's no lock-in period or penalties

Best of all, most top high-yield savings accounts are paying the same high rates as CDs right now. A handful are in the 3.75% to 4.25% range as of early 2026. Yes, they might lower throughout the year, but it's not a horrible spot for money you haven't decided what to do with yet.

CDs can boost your returns, but only if your timing lines up. Keep your emergency fund flexible, and only lock in money you won't miss.

Looking for the highest-paying CDs right now? See today's highest-paying CDs and calculate how much more your savings could earn.