economy
$45,000 CD vs. $45,000 high-yield savings account: Which can earn more over the next year?
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TL;DR
- Both CDs and high-yield savings accounts are FDIC-insured up to $250,000 and currently offer interest rates around 4%.
- CDs offer a fixed interest rate, while HYSAs have a variable rate that can change.
- Calculations show that for a $45,000 deposit, a HYSA is more profitable in some scenarios (3-month, 9-month terms), while a CD is more profitable in another (1-year term), and they earn the same in a fourth (6-month term).
- If interest rates are expected to rise, a HYSA may be more advantageous; if rates are expected to hold or fall, a CD might be better.
- Splitting funds between both account types is also a viable option.
- Savers are advised to move funds from traditional savings accounts (around 0.38% interest) to these higher-rate alternatives.