Where Should You Keep Your Extra Cash: High-Yield Savings Accounts vs. Certificates of Deposits
Benefits of High-Yield Savings Accounts and CDs
Many people keep their savings in a bank account that earns interest. Doing this allows them to be prepared for future expenses and earn extra money while their money sits in the bank.
With savings accounts paying up to 5%, is there any benefit to keeping your extra money in a CD instead of a savings account? There's one significant benefit you should consider. I'll explain what you need to know when deciding where to keep your extra cash.
Why High-Yield Savings Accounts Are Attractive
- Benefit from rates of up to 5%
- Access funds quickly without penalties
- Higher interest rates than traditional savings accounts
Understanding Certificates of Deposits (CDs)
- Guaranteed rates for fixed periods
- Options for different terms (e.g., six months, one year, two years)
- Penalties for early withdrawals may apply
Consider your financial goals and future plans before deciding where to allocate your extra savings. Research and compare different bank account options to maximize your returns.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.