Certificate of deposit (CD) rates are strong right now — as high as 4.55% APY. But how do you know when locking your money up is the right choice?
Looking for a secure place to grow your savings? See our expert picks for the best FDIC-insured high-yield savings accounts available today – enjoy peace of mind with competitive rates.
Here are four signs you may not want to go with a CD — and why opening a high-yield savings account (HYSA) is a better option.
1. You’re building an emergency fund
An emergency fund, by definition, needs to be accessible during an emergency. But with a CD, your money’s locked up for a fixed term — anywhere from a few months to several years. If you pull your cash out early, you’ll likely be forced to pay an early withdrawal penalty, canceling out all or some of your earnings.
A high-yield savings account, on the other hand, gives you access to your money whenever you need it. You’ll still earn a competitive interest rate — as high as 4.40% APY — but you won’t be penalized for using your savings when you need it most.
2. You’re saving for a short-term goal
If you’re saving for a vacation or a large purchase, a CD can be a decent option. But if your timeline changes and you need your money sooner, a CD will slow you down.
That’s because once again, you’ll be forced to pay an early withdrawal penalty — or delay your plans. But you can get a comparable return on your money with an HYSA, letting you build toward your savings goal while being able to access your money at any time.
Ready to level up your savings? Open one of our favorite high-yield savings accounts today and earn up to 4.40% APY now.
3. You’re starting with a small amount
The highest CD rates often come with high minimum deposits — $500, $1,000 or more. If you’re starting small or want to grow your savings gradually, that can be a barrier.
HYSAs are easier to access, with many letting you open an account with $0 and contribute as you please. Some even include features like round-up transfers or automatic deposits to help build your balance.
4. You want to keep contributing more to your savings
Once you deposit money into a CD, you usually can’t add more money until the CD matures. That’s a problem if you’re saving money gradually and want to keep contributing to your investment over time.
An HYSA lets you add (and withdraw) funds whenever you want. Whether it’s through recurring deposits or an unexpected windfall, you can grow your savings at your own pace and get a strong return all the while.
Keep your money flexible with an HYSA today
CDs can make sense if you’re parking a lump sum that you won’t need for a while. But for everyday savings, short-term goals, and gradual investments, an HYSA is the better fit.
What are you waiting for? Open one of our favorite HYSAs today to start earning more than 10x the national average APY on your savings.
Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes.
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
