Why I'm Not Opening Any CDs in July 2025 -- Even With Rates Over 4%

CD rates have fallen a little this year, but they're still looking pretty good for shorter terms. A few banks out there are offering 1-year CDs with APYs in the 4.00% range. Not bad at all…

But honestly, I'm not touching CDs right now. Because I've already got a system that works better for me and my money goals.

Here's what I'm doing instead.

My short-term cash lives in a high-yield savings account

For any money that I need quick access to -- like for emergencies, travel, or a new surfboard (hey, priorities) -- I keep it all in a high-yield savings account (HYSA).

Right now, I'm earning a 4.00% APY without locking up a single dollar.

Sure, I could earn a tiny bit more from a short-term CD. And I am exposed to rate cuts with an HYSA. But honestly, I'm happy forfeiting those few extra dollars in interest to have my money accessible any time.

I keep about $25,000 in my HYSA. At my current rate that earns me almost $1,000 in interest each year. I'm happy with that!

My long-term money is invested for growth

My company offers a great 401(k) plan (with a 6% match -- woot woot!) Inside my 401(k), all my contributions go straight into a total stock market index fund.

Over the long term, broad stock market index funds perform really well. The S&P 500 has historically averaged around 10% growth per year. And while I'm not expecting to achieve that exact same performance in future years, I'm pretty confident I'll crush any return from CDs or savings products.

I know stocks can be volatile. They go up, they go down… and sometimes I look at my balance and poop my pants. But that's when I remember all that money is locked up until I'm 59 1/2 anyway. So I'm not sweating short-term swings. I'm playing the long game.

Aggressive saving and investing today can pay off massively in retirement.

IRAs and brokerage accounts, too

For most people, a 401(k) is hands-down one of the best tools for building retirement savings. If you have access to one -- prioritize it!

But they're not the only great option out there.

My wife and I both contribute to Roth IRAs, and we also invest regularly through a plain old brokerage account.

IRAs come with many of the same tax advantages as a 401(k). And for anyone who doesn't have access to a workplace plan (or want a bit more investment flexibility), they're a great first step.

In 2025 you can put up to $7,000 in an IRA (or $8,000 if you're 50 or older), and let that money grow tax-advantaged over time.

Another even more flexible option is a regular brokerage account. You won't get the same tax breaks, but there's basically unlimited potential with brokerage accounts.

Don't have an IRA yet? Check out our curated list of the best IRAs for 2025 to get started.

CDs just don't fit my plan

Could I squeeze a few extra bucks by opening a CD instead of keeping cash in my savings account? Maybe. But the extra interest wouldn't move the needle much for me.

And for my long-term goals, I'm investing more aggressively with index funds inside of retirement accounts.

CDs just don't have a spot in my plan right now. Maybe someday they'll make sense. But for 2025 I'm happily skipping 'em.