CD vs. High-Yield Savings

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Difference Between A CD And a Savings Account

CriteriaCertificate of Deposit (CD)High-Yield Savings Account
Interest RatesTypically higher than traditional savings, but may be on par with or slightly higher than high-yield savings.Higher than traditional savings accounts but varies based on the bank and economic conditions.
LiquidityMoney is locked in for the term of the CD. Early withdrawal can result in penalties.High liquidity. You can withdraw or deposit anytime, though some limits may apply.
Duration/TermMoney that you might need access to in the short term while still earning a decent interest rate.No fixed term. You can keep the account open as long as you like.
Access to FundsLimited to the end of the CD term without penalties.Can access funds anytime, subject to federal withdrawal limits.
Best ForMoney that you won’t need for a set period and want to earn a guaranteed interest rate.Money that you might need access to in the short term, while still earning a decent interest rate.
While CDs offer potentially higher interest rates with fixed terms and penalties for early withdrawal, High-Yield Savings Accounts provide greater liquidity and flexibility, allowing for anytime access to funds with competitive interest rates.

Expert Insight

  • Tailor your choice between CD and high-yield savings based on your financial objectives.
  • For immediate or near-future requirements, a high-yield savings account offers greater liquidity.
  • CDs provide better interest rates and a guaranteed return for funds you won’t access soon.

Understanding the Basics

  • Savings Account: A savings account is a deposit account held at a bank or financial institution. It allows you to deposit money, earn interest over time, and withdraw funds when needed.
  • Certificate of Deposit (CD): A CD is a type of savings account that holds a fixed sum of money for a fixed period, ranging from a few months to several years. In exchange for committing your money for a set period, you typically earn a higher interest rate.

High-Yield Savings vs. Traditional Savings

A high-yield savings account is like your typical savings account but with a twist: it offers a significantly higher interest rate. This “high yield” ensures your money grows faster over time.

Which is Right for You?

  • If you’re looking for flexibility and need to access your funds regularly, a high-yield savings account is your best bet.
  • If you have a lump sum that you won’t need for a while and want to earn a higher interest rate, consider a CD. Just ensure you won’t need to access the funds before the term ends.


Both CDs and high-yield savings accounts offer avenues to grow your savings. Your choice between them should hinge on your financial goals, how soon you might need the funds, and the rates on offer. By understanding the nuances of each, you can make an informed decision that aligns with your financial aspirations. Remember, in the world of finance, knowledge is power. Equip yourself with it, and you’re on the path to a brighter financial future.

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Is a CD a savings account?

In the traditional sense, no. While CDs (Certificates of Deposit) and savings accounts are deposit accounts offered by banks, they have distinct differences. Savings accounts offer more liquidity, allowing you to deposit and withdraw funds freely. At the same time, CDs require you to deposit a specific amount for a fixed term in exchange for a higher interest rate. However, in the broader sense of being a long-term savings vehicle, CDs can serve a similar purpose to savings accounts by providing a secure way to save and grow your money over time.

Shawn Plummer, CRPC

Chartered Retirement Planning Counselor

Shawn Plummer is a Chartered Retirement Planning Counselor, insurance agent, and annuity broker with over 14 years of first-hand experience with annuities and insurance. Since beginning his journey in 2009, he has been pivotal in selling and educating about annuities and insurance products. Still, he has also played an instrumental role in training financial advisors for a prestigious Fortune Global 500 insurance company, Allianz. His insights and expertise have made him a sought-after voice in the industry, leading to features in renowned publications such as Time Magazine, Bloomberg, Entrepreneur, Yahoo! Finance, MSN, SmartAsset, The Simple Dollar, U.S. News and World Report, Women’s Health Magazine, and many more. Shawn’s driving ambition? To simplify retirement planning, he ensures his clients understand their choices and secure the best insurance coverage at unbeatable rates.

The Annuity Expert is an independent online insurance agency servicing consumers across the United States. The goal is to help you take the guesswork out of retirement planning and find the best insurance coverage at the cheapest rates

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