High-yield savings accounts vs. CDs: Which pays more currently?

When it comes to saving your hard-earned money, you have several options available to you. Two of the most popular are high-yield savings accounts and certificates of deposit (CDs).

High-yield savings accounts offer interest rates up to 10 times higher (or more) than regular savings accounts. CDs also offer high rates, but they require you to lock up your funds for a predetermined period, known as the term.

Both options are a safe place to store your money and earn some major interest to boot, but which option best suits your needs? If you're interested in earning as much interest as possible, it's important to know where high-yield savings account and CD rates currently stand.

See how much more you could be earning with a top savings account here.

High-yield savings accounts vs. CDs: Which pays more currently?

Both high-yield savings accounts and CDs offer significantly greater yields than regular savings accounts. And in today's high rate environment, they can be particularly lucrative. Both types of accounts are protected by federal deposit insurance, and you can easily open either at a traditional bank, online bank or credit union.

But when it comes to earning potential alone, CDs come out ahead right now.

As of July 19, 2023, here are some of the top high-yield savings accounts and the APY they come with:

• Western Alliance Bank Savings Account: 5.15% APY
• Popular Direct Savings: 5.05% APY
• Salem Five Direct eOne Savings: 5.01% APY
• Newtek Bank Personal High-Yield Savings: 5.00% APY

By comparison, top CDs are offering:

• First Internet Bank of Indiana: 5.48% APY (1 year)
• Connexus Credit Union: 5.36% APY (1 year)
• CIBC Bank USA: 5.36% APY (1 year)
• Popular Direct: 5.35% APY (1 year)
• First Internet Bank of Indiana: 5.33% APY (6 months)
• Bank5 Connect: 5.30% APY (6 months)
• Bask Bank: 5.25% APY (6 months)
• Popular Direct: 5.25% APY (6 months)

So, if you're going by interest rates alone, you're better off opting for a CD.

Explore your CD options online now and start earning more money!

Other considerations to keep in mind

Interest rates are important when you want to grow your savings faster. But they aren't the only thing to consider when it comes to choosing a high-yield savings account or CD. Which one is best for you depends on a couple of other factors.

Ease of accessing your money

If you want an account you can tap into as needed — for example, for emergency expenses — a high-yield savings account is the better choice. While some high-yield accounts have withdrawal limits (typically six withdrawals per month), you can access your funds as often as you want up to that limit without penalty.

You can also withdraw money quickly by visiting a branch or using an ATM card if the account comes with one. With a CD, receiving your funds could take a few business days if you decide to cash out.

Plus, many CDs have early withdrawal penalties if you take money out before the term expires. You can open a no-penalty CD, but it probably won't have as high a rate.

Fixed vs. variable APY

Not only do CD interest rates tend to be higher, but you also lock in your rate when you open the account. That means if you open a CD when rates are high, you're guaranteed to continue earning interest at that rate no matter what the overall rate environment does.

High-yield savings accounts, on the other hand, have variable APYs. If the federal funds rate goes up, your account earnings go up with it. But if the federal funds rate drops, you'll earn less interest than you have been.

Compare today's top savings account options here to see how much you could be earning.

The bottom line

Currently, CDs are paying higher interest rates than high-yield savings accounts. But which is best for you also depends on your saving habits and needs.

If you have a lump sum of money you don't need to access right away and you want a guaranteed interest rate, CDs are ideal. If you want more flexibility and think you'll need to access your money quickly, a high-yield savings account is the better choice. In the end, both account types offer competitively high interest rates, so you really can't go wrong with either.