CDs vs. High-Yield Savings Accounts: Best Way to Grow Your Money in 2025”

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CDs vs. High-Yield Savings Accounts: The Smartest Way to Grow Your Savings in 2025

Jun 13, 2025

If you’re looking for a safe, hands-off way to grow your money in 2025, Certificates of Deposit (CDs) and High-Yield Savings Accounts (HYSAs) are two of the most reliable options. While both offer security and steady interest, they serve different financial purposes.

In this guide, we’ll break down the key differences between CDs and high-yield savings accounts, and help you decide when to use one—or both—to maximize your earnings with minimal effort.

What Is a Certificate of Deposit (CD)?

A Certificate of Deposit, or CD, is a savings product that pays a fixed interest rate over a predetermined period. When you open a CD, you agree to leave your money untouched until it matures, which could be anywhere from a few months to several years.

In return, banks typically reward you with higher APYs (Annual Percentage Yields) than regular or even high-yield savings accounts. But there’s a catch—withdrawing your money early triggers penalties, often costing you several months’ worth of interest.

Benefits of CDs:

Fixed rate regardless of market conditions
Higher interest than traditional savings
Ideal for long-term savings you won’t need to access

Drawbacks of CDs:

Funds are locked in until maturity
Early withdrawal penalties can apply
Minimum deposit requirements may be higher

💡 Tip: Some savers use a CD ladder strategy—spreading money across multiple CDs with staggered maturity dates. This balances long-term returns with periodic access to funds.

What Is a High-Yield Savings Account (HYSA)?

A high-yield savings account functions similarly to a traditional savings account, but with a much higher interest rate—often 10x more or greater.

HYSAs are perfect for liquid savings, meaning you can withdraw your funds anytime without penalty (though many institutions limit withdrawals to six per month). Most high-yield accounts are offered by online banks, which can afford to pay more interest due to lower operating costs.

Benefits of HYSAs:

Flexible access to funds
Competitive APYs with low or no fees
Great for emergency funds or short-term goals

Drawbacks of HYSAs:

Interest rates are variable
Some accounts require activity to avoid maintenance fees
APYs may decrease at higher balances

CD vs. High-Yield Savings Account: What’s the Difference?

Feature	Certificate of Deposit (CD)	High-Yield Savings Account (HYSA)
Interest Rate	Fixed, typically higher	Variable, still competitive
Access to Funds	Locked until maturity	Withdraw anytime (some limits)
Early Withdrawal	Penalty applies	None, unless exceeding monthly limit
Ideal Use	Long-term, don’t-need-now money	Emergency fund or short-term savings
Risk Level	Very low, FDIC/NCUA insured	Very low, FDIC/NCUA insured

Both are low-risk, interest-generating accounts that require minimal effort once set up. But their accessibility and purpose differ—CDs offer better returns if you can lock your money away, while HYSAs are great for funds you may need in the near future.

Are These Accounts Safe?

Yes. Both CDs and HYSAs are offered by federally insured financial institutions:

FDIC (for banks) and
NCUA (for credit unions)

This means deposits up to $250,000 per person, per institution are protected—even if the bank fails.

However, there’s one financial risk to consider: inflation. If inflation outpaces your interest rate, the real value of your savings could decrease. CDs lock your rate for the term, while HYSAs adjust rates—but may not always keep pace with inflation.

Should You Use Both?

In many cases, the smartest move is to open both a CD and a high-yield savings account.

Use a HYSA for flexibility. It’s the perfect home for emergency funds and short-term savings goals.
Use a CD for long-term savings that you know you won’t need soon. You’ll lock in a higher return without having to worry about fluctuating rates.

Together, they give you a balanced, low-risk savings strategy—liquidity when you need it and stronger returns on idle cash.

Final Thoughts

In 2025, savers have more options than ever to earn interest without taking on unnecessary risk. Both CDs and high-yield savings accounts are smart tools for building financial stability—and choosing the right one depends on how soon you’ll need your money.

Looking for the best of both worlds? Open a HYSA for short-term flexibility and a CD for long-term growth. You could be earning hundreds (or even thousands) in interest each year, completely passively.

And remember—you don’t have to stick with your current bank. Many of the best rates are available through trusted online banks with no fees and minimal deposit requirements.