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CDs vs. High-Yield Savings Accounts: Pros, Cons, and Why I Personally Use Both

Updated
Brooklyn Sprunger
Author: Brooklyn Sprunger
Brooklyn Sprunger
Brooklyn Sprunger
Content Manager

Brooklyn Sprunger is a full-time Content Manager and Personal Finance Writer at Motley Fool Money, where she oversees product reviews and ratings while also writing about credit cards, bank accounts, investing, auto insurance, and other personal finance topics. She has worked in financial content since 2018, including more than four years at The Motley Fool. When she’s not writing or editing, Brooklyn is likely hiking and watching the Tennessee Vols.

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Many or all of the products here are from our partners that compensate us. It’s how we make money. But our editorial integrity ensures that our product ratings are not influenced by compensation. APY = Annual Percentage Yield.

I've had both a high-yield savings account (HYSA) and a certificate of deposit (CD) for a few years now. But I love them for different reasons, and I use them for different purposes.

I park my emergency fund and short-term savings I might need to access quickly in my high-yield savings account. My certificate of deposit, on the other hand, is where I stash cash I know I won't need for a while. In fact, my 10-month CD is just about to mature. It earns a higher rate, and I'm not tempted to dip into it.

If you’re deciding between a CD vs. a high-yield savings account, I'll break down how they compare and how to know which one fits your goals.

What's a high-yield savings account?

A high-yield savings account is a savings account that earns a much higher interest rate than traditional bank accounts. Its best trait is flexibility: You can deposit or withdraw funds anytime, and many accounts come with no monthly fees.

What it's good for:

Why I use it: I like the peace of mind that I can access my money whenever I want, but I still earn interest while it sits. It's less risky than investing the money and earns so much more interest than a regular savings account.

Compare savings rates

Make sure you're getting the best account for you by comparing savings rates and promotions. Here are some of our favorite high-yield savings accounts to consider.

Account APY Bonus Next Steps
up to 3.80%
Rate info Circle with letter I in it. Earn up to 3.80% Annual Percentage Yield (APY) on one SoFi Savings account with a 0.70% APY Boost (added to the 3.10% APY as of 5/28/26) for up to 6 months. Open your first SoFi Checking and Savings account and receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 12/31/26. Rates are variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
Min. to earn: $0
Earn $50 or $400 and +0.70% Boost on Savings APY with direct deposit. Terms apply. Circle with letter I in it.

Earn up to 3.80% Annual Percentage Yield (APY) on one SoFi Savings account with a 0.70% APY Boost (added to the 3.10% APY as of 5/28/26) for up to 6 months. Open your first SoFi Checking and Savings account and receive eligible direct deposits OR qualifying deposits of $5,000 every 31 days by 12/31/26. Rates are variable, subject to change. Terms apply at sofi.com/banking#2. SoFi Bank, N.A. Member FDIC.
4.15%
Rate info Circle with letter I in it. Earn a guaranteed 4.15% APY for 90 days. After that, your savings keep growing at a competitive standard rate — currently 3.97% APY (subject to change). No minimum account balance required. Deposit or withdraw at any time with no additional fees. See product terms for complete details.
Min. to earn: $1
Earn up to $1,200 when you sign up and fund your account using code SUMMER26.¹
4.00% APY with $250+ in monthly deposits
Rate info Circle with letter I in it. *LevelUp Rate of 4.00% APY applied to full balance with $250+ in deposits in Evaluation Period. Otherwise, accounts earn Standard Rate of 3.00% APY. LevelUp Rate applies to first two statement cycles. Rates variable & subject to change at any time. See terms: https://www.happen.com/legal/deposits/levelup-savings-t-and-cs
Min. to earn:
N/A
Open Account for Happen Bank LevelUp Savings

On Happen Bank's Secure Website.

Disclaimers

https://www.happen.com/legal/deposits/levelup-savings-t-and-cs

¹New customers only. Earn a cash bonus (the "Base Bonus") when you deposit and maintain funds with partner banks on the Raisin platform. Customers will receive a Base Bonus of $50 for depositing between $10,000 and $24,999; $125 for depositing between $25,000 and $49,999; $250 for depositing between $50,000 and $99,999; $500 for depositing between $100,000 and $199,999; and $1,000 for depositing $200,000 or more.

Customers may earn an additional bonus by setting up a recurring deposit within 14 days of their initial deposit (the “Recurring Deposit Bonus”). To qualify, the recurring deposit must be established within 14 days of the initial deposit date and it must execute at least two (2) times within 90-days of the initial deposit. Recurring Deposit Bonus eligibility is determined by your Base Bonus tier:

  • Customers depositing between $10,000–$24,999 with aggregate recurring deposits of $100 or greater receive a $10 bonus
  • Customers depositing between $25,000–$49,999 with aggregate recurring deposits of $250 or greater receive a $25 bonus
  • Customers depositing between $50,000–$99,999 with aggregate recurring deposits of $500 or greater receive a $50 bonus
  • Customers depositing between $100,000–$199,999 with aggregate recurring deposits of $1,000 or greater receive a $100 bonus
  • Customers depositing between $200,000+ with aggregate recurring deposits of $2,000 or greater receive a $200 bonus

Customers are eligible to earn the Recurring Deposit Bonus associated with their Base Bonus tier or any lower Recurring Deposit Bonus tier. For example, a customer with an initial deposit of $200,000 (qualifying for the highest Base Bonus tier) whose aggregate recurring deposits total $500, is eligible for the lower tier and will receive the $50 Recurring Deposit Bonus. However, setting up a recurring deposit greater than your Base Bonus tier's required threshold will not qualify you for a higher Recurring Deposit Bonus.

The Recurring Deposit Bonus is paid in addition to the Base Bonus. To qualify for the Base Bonus and Recurring Deposit Bonus, your first deposit must be initiated between June 1, 2026, and August 31, 2026, by 11:59 PM ET, and the promo code SUMMER26 must be entered at the time of sign-up. Only funds deposited within 14 days of the initial deposit date and maintained with partner banks on the Raisin platform for 90 days will be eligible for the Base Bonus. Bonus cash will be credited directly to your Cash Account within 30 days of meeting all qualifying terms. This offer is available to new customers only and may not be combined with any other bonus offers. Raisin may modify or end this offer at any time and may withhold or revoke bonuses in cases of fraud, abuse, or violation of these terms or Raisin’s Terms of Service.

What's a CD?

A certificate of deposit locks your money in for a set amount of time -- usually anywhere from 6 months to 5 years. In exchange, you get a guaranteed interest rate that typically beats what HYSAs offer (I locked in a 5.20% APY in my CD while my HYSA dropped to 4.40% APY). The catch is that you'll pay a penalty if you withdraw the money early.

What it's good for:

  • Savings you won't need for a while
  • Earning a higher return on idle cash
  • Avoiding the temptation to spend

Why I use it: I like using CDs for savings goals that are six to 12 months out -- like a future move or big home project. I know I won't touch the money, so I might as well earn more on it.

Compare top CDs

Rates as of July 31, 2026
EverBank CD Raisin

EverBank CD Raisin

APY:
4.10%
Term:
6 Months
Min. Deposit:
$1
Open Account for

On Raisin's Secure Website.

CIT Bank No-Penalty CD

CIT Bank No-Penalty CD

Member FDIC.
APY:
3.90%
Term:
11 Months
Min. Deposit:
$1,000
Open Account for

On CIT's Secure Website.

How HYSA and CD rates are determined

Both CD and savings rates are closely tied to the Federal Reserve’s interest rate decisions.

When the Fed raises rates, banks usually respond by increasing APYs on savings accounts and CDs. When rates fall, variable savings rates often follow, while CDs keep paying the rate you locked in.

Banks also adjust rates based on their own needs. Online banks, in particular, tend to offer higher yields to attract deposits.

Bottom line: Rates can change anytime, but CDs offer certainty. If you see a strong CD rate that fits your timeline, locking it in can make sense.

CD vs. HYSA: Side-by-side comparison

Feature High-Yield Savings Account Certificate of Deposit
Interest rate Competitive, but variable Often higher, and fixed
Access to funds Anytime Locked in for a term
Withdrawal penalties None Usually applies
FDIC insured Yes Yes
Best for Flexible savings Committed savings

Note: Both HYSAs and CDs are FDIC insured up to $250,000 per depositor. That means your money is protected even if the bank fails.

Taxes on CDs and savings accounts

Whether you're earning interest on a CD or a HYSA, the IRS still wants a cut. You'll owe income tax on the interest you earn -- even if you don't withdraw it. It's usually reported on a 1099-INT form at tax time.

Can you lose money in a CD or HYSA?

Nope, that's the beauty of both of these savings strategies. As long as you stay under the FDIC insurance limit ($250,000 per bank, per person), your money's safe. These are both low-risk ways to grow your savings.

How to choose between a CD and HYSA

If you're not sure which account to open, ask yourself one question: Will I need to access this money in the next six to 12 months?

  • If yes, go with a high-yield savings account. You'll earn interest without tying your hands.
  • If no, a CD could earn you more. Just be sure to get one for a term that makes sense for you.

When it makes sense to have both

Honestly, I think having both a HYSA and a CD is one of the smartest money moves you can make, and that's exactly what I do.

A high-yield savings account gives you the flexibility to cover surprise expenses or move quickly on last-minute plans (like when I found a flight deal I couldn't pass up). But a CD helps you earn more on money you don't need right away -- and keeps it out of sight, out of mind.

It makes sense to have both if:

  • You want a clear separation between short- and long-term savings
  • You're trying to resist the urge to dip into certain funds
  • You want to earn more without taking on any market risk
  • You've already got your emergency fund covered and are looking for your next best savings move

For me, the combo gives structure to my savings. My HYSA is for flexibility; my CD is for focus. And together, they help me make the most of my money.

Final thoughts

There's no one-size-fits-all answer here. Both HYSAs and CDs are smart, low-risk places to grow your money. It just depends on how hands-off you want to be -- and how soon you might need your cash.

Personally, I like the balance of having both: quick access when I need it, and better returns when I don't.

If you're thinking about opening an account, we've rounded up the best high-yield savings accounts and top-paying CDs available today. Compare rates, terms, and features to find the right fit for your goals.

FAQs

  • Not necessarily -- it just depends on your goals. CDs usually pay more, but you'll have to lock in your money. HYSAs are better if you want flexibility.

  • You'll usually pay a penalty, like a few months' worth of interest. That's why I only use CDs for cash I know I won't need until later.

  • You could, but you might miss out on strong rates now. I'd rather lock in a solid return today than gamble on what the Fed might do next.