Why I'm Putting My $25,000 in an HYSA Instead of a CD
Image source: Getty Images
A buddy of mine just opened a 1-year CD and was stoked about locking in a 4.00% APY. That's a great deal, and I'm happy for him. But personally, I'm not jumping on the CD train -- even with more Fed rate cuts likely coming soon.
I've got about $25,000 in cash sitting in a high-yield savings account (HYSA) earning almost the same rate. Even though CDs might earn me slightly more, the flexibility of an HYSA fits my life better right now.
Here's how I'm thinking about it.
Why I'm not choosing a CD
The main thing that bugs me about CDs is the commitment. You've gotta lock up your cash for six months, a year, or however long the term is. And if you touch the money early, there's a penalty.
I get that CDs have a locked-in interest rate, which is good in times when the Fed is cutting rates (like right now).
But my HYSA is still earning a killer rate -- it's 3.75% APY as of today. A comparable top 12-month CD rate is floating around 4.00%. That's only a 0.25% difference.
On $25,000, that's around $62.50 more in interest over an entire year. Honestly, I'm cool leaving that on the table if it means I can pull my cash anytime I want, without any questions asked.
My favorite HYSA right now
I'm a huge fan of the LendingClub LevelUp Savings account.
It currently earns 4.20% APY with $250+ in monthly deposits, which is actually higher than the CD rate my buddy just locked in! And those monthly deposits can come from anywhere -- it doesn't need to be a paycheck deposit.
I like it because it's low-hassle and doesn't charge any annoying fees. You can just set up a recurring transfer and let your money grow.
LendingClub is FDIC insured, so your savings are protected up to $250,000. If your money's still sitting in a regular savings account earning next to nothing, this is an easy upgrade.
Check out our full LendingClub LevelUp Savings review here to see if it's a good fit for you.
2025 Award Winner
LendingClub LevelUp Savings
On LendingClub's Secure Website.
= Best
= Excellent
= Good
= Fair
= Poor
= Best
= Excellent
= Good
= Fair
= PoorOn LendingClub's Secure Website.
- Competitive APY
- No fees
- Easy ATM access
- Unlimited number of external transfers (up to daily transaction limits)
- Requires you to make monthly deposits to earn the best APY
- ACH outbound transfers limited to $10,000 per day for some accounts
- No branch access; online only
The LendingClub LevelUp Savings account has a lot to offer. At the top of the list is its high APY, though you must deposit monthly to earn the best rate. Next is zero account fees, a strong and straightforward perk. Finally, you get a free ATM card, which you can use to withdraw from thousands of ATMs nationwide. Interested? You can open an account with $0.
Why I'm holding over $25,000 in cash
There are two main reasons I keep a big cash pile on hand.
First is for emergencies. I keep about three to four months of expenses saved, just in case life throws a curveball. For me, that's around $20,000.
Upcoming savings goals: I've got a big family trip to Australia in the works, and it's gonna cost probably $10,000 to $15,000. So I'm building up that sinking fund slowly, adding about $1,000 a month.
I'm not looking to get rich off this cash. I just want it to grow a little while staying safe and easily accessible. And an HYSA is perfect for that.
Where I keep the rest of my money
With the market going a little bonkers this year, I'll admit, part of me wants to hold onto extra cash. Just in case there's a crash around the corner.
It's hard not to think that way when everything's been rising so fast. Stocks, crypto, gold… all up big in 2025. My index funds are up about 15% so far, which is nuts.
But honestly, I'm still sending every extra dollar straight into my brokerage account. I'm not trying to time anything. Just sticking with my long-term plan of slow and steady investing.
That's why I have an emergency fund in the first place. If something unexpected happens, I won't need to mess with my investments. I can just tap my savings and leave the rest alone.
So even though I feel like sitting on more cash right now, I'm doing the opposite. Staying the course and investing through the noise.
Final thoughts
CDs can be a smart investment for some people, but they're not worth it for me.
A high-yield savings account just makes more sense. Rates are almost the same as what short-term CDs offer. And the flexibility is worth way more to me than earning a few extra bucks in interest.
To start earning potentially hundreds of dollars a year, move your cash to one of these top high-yield savings accounts available today.
Our Research Expert
Joel O’Leary is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, mortgages, and other personal finance topics. Joel has been writing about personal finance since 2018, previously leading editorial content for the How To Money podcast and serving as a resident writer at Budgets Are Sexy. He bought his first rental property at age 18, funding the down payment with savings from his high school job at McDonald’s -- a testament to his lifelong passion for smart money decisions. His work aims to make personal finance accessible and actionable for everyday readers. When he’s not writing, Joel enjoys surfing and spending time with his family.