CD vs. savings account

Which savings method best fits your goals?

Budgeting and planning
March 04, 2020

When deciding whether to save money using a certificate of deposit (CD) or a savings account, knowing when you need the money is key. CDs tend to have higher interest rates but locked terms, while savings accounts earn interest but give you easier access to your money.

  CDs Savings accounts
Interest rates
A CD typically has a higher interest rate, or APY (annual percentage yield), than other savings account types, so you may earn more interest over time than you would with a general savings account.
Savings accounts
You have regular access to your savings while still earning interest.
Rates locked or variable
A CD’s APY is locked in for the term, or length of time, you select. That might be 6 months, 1 year, 5 years or more. Even if the offered interest rate goes down over that timeframe, your interest rate will stay locked in at its stated rate.
Savings accounts
You can move all or parts of your savings account to a different account or account type to take advantage of higher rates if you choose.
Funds accessibility
You don’t have access to the funds until the term expires, which can prevent you from spending it and encourage you to save. (You can withdraw it earlier, but may pay early withdrawal penalties.)
Savings accounts
You can access your funds in a number of ways, including at a branch, using an ATM or debit card (if you also have a checking account) and in digital banking.
Most common fees
If you withdraw your money before your CD expires, you may pay early withdrawal penalties.
Savings accounts
Some savings accounts may charge a monthly maintenance fee if your balance falls below a certain amount. If you make more than six withdrawals or transfers from your savings account in a month or monthly period, you’ll incur an excessive withdrawals fee. Other fees may apply.
Stay aware of the timing of your CD’s maturity (expiration) date so you can withdraw the funds if you need them during the grace period, roll the money over into another CD, or move the money to another account type.
Savings accounts
If you opened your savings account with a promotional rate, know when the promotion period expires and what your new interest rate will be so you know you’re earning a competitive rate.
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