In today’s evolving economic climate, choosing the right savings account could help you maximize your savings and even reach your financial goals faster. Though popular, traditional savings accounts often won’t get your money to work for you the way High Yield Savings Accounts (HYSAs) and Certificates of Deposit (CDs) could. And when interest rates are high, it’s good to understand the differences between these accounts and their benefits so you can make informed decisions about your savings strategy.
High Yield Savings Account vs CD: A Guide
When interest rates are high, it's good to understand the differences between these accounts and their benefits so you can make informed decisions about your savings strategy.
Published August 07, 2024
10 min read
HYSA vs CD: What’s the difference?
Both High Yield Savings Accounts (HYSAs) and Certificates of Deposit (CDs) are great savings vehicles that are generally seen as safe investments, especially in times of high market volatility. It’s important, however, to understand how they work, as they serve different purposes and offer distinct features.
A High Yield Savings Account is similar to a traditional savings account, but with a higher rate of return. Just like your usual savings account, a HYSA offers you the flexibility of easy and immediate access to your funds. It does not have any time limits that lock in your money, allowing you to deposit and withdraw cash whenever you need it. However, the interest rate you will receive for your HYSA will fluctuate with the current market offerings.
Certificates of Deposit, on the other hand, offer a guaranteed rate of return for the lifetime of the certificate, but you are required to keep your money locked in the account for a specific amount of time, which can range from a few months to several years.
Determining which account is more beneficial depends on your individual needs. If you value liquidity and the ability to access your savings at any time, a HYSA may be the better choice. However, if you have a specific savings goal and don’t need immediate access to your funds, a CD’s guaranteed rate of return can be advantageous.
HYSA vs CD: Pros and cons
If you’re considering opening a HYSA or a CD, it’s helpful to explore the pros and cons of each offering to help you make an informed decision. You can choose to go with one or both depending on your savings approach. Ultimately, how you structure your savings plan is a matter of personal preference and need.
How to take advantage of HYSA savings
Here are some of the pros and cons of this type of account, and a few examples of how you could use it to reach your savings goals.
How to take advantage of Certificate of Deposit savings
Here are some of the pros and cons of CDs, and some examples of how you could use it for longer-term goals.
High Yield Savings Account with Laurel Road
When it comes to High Yield Savings Accounts, Laurel Road offers competitive rates that can help your savings grow faster. With rates that are consistently higher than the national average, you can maximize your savings potential and reach your financial goals sooner. Laurel Road’s HYSA also requires no minimum balance and zero monthly maintenance fees. Learn more about our current HYSA interest rates.
Save your way: High Yield Savings Account vs CD
Choosing between a High Yield Savings Account and a Certificate of Deposit depends on your unique needs and preferences. Consider your short-term and long-term financial objectives — as well as your comfort level with locking in funds — when making your decision. If you value flexibility, easy access to your cash, and the potential for higher interest rates, a HYSA may be the right choice for you. Alternatively, if you have specific savings goals and can commit to a fixed term, a CD’s guaranteed rate of return might be more suitable. Take control of your savings and start making progress towards your financial goals in a way that’s best for you.
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