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When to choose a high-yield savings account over a CD

High-yield savings accounts let you access your money whenever you need it without penalty

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Increasing your savings balance is one of the best things you can do to improve your finances at any time But today—with Interest rates are rising and uncertainty about recession — a Healthy savings balance May provide security and allow you to take advantage great rate.

Currently the most popular account types are two High Yield Savings Account And Certificate of Deposit (CD). Because these accounts offer interest rates above the national average and can help you Earn up to 4% Or more on the money you save. But they are also different. When the CD lets you Today’s great rate lock In the long run, High Yield Savings Account More flexible and easy to access.

Compare today’s top savings rates to find the best one for you now.

When to choose a high-yield savings account over a CD

Here are three cases where it might make more sense Open a high-yield savings account On Certificate of Deposit:

When you’re saving for an emergency

If you’re prioritizing savings because you want to Build your emergency fundYou’ll want to make sure you keep it easily accessible, safe place. Unlike a CD, a high-yield savings account allows easy access to your savings when you need it — without punishment.

For example, say you’ve been laid off unexpectedly and need to save to cover your monthly bills, or your refrigerator unexpectedly stops working and you need to access some of your savings to replace it on short notice. If all your money is tied up in a CD over a five-year period, it won’t do you any good.

With a high-yield savings account, you can access your emergency fund Any time you need to use it, the remaining balance will continue to earn interest as you work to pay it off with contributions over time.

Learn more about today’s best savings account rates.

When you want to contribute

One of the biggest downsides to CDs when it comes to contributing to your balance is their lack of flexibility. Typically, CDs require an upfront deposit, which is the amount you’ll earn interest on throughout the CD. duration.

It’s nice to know exactly how much interest you’ll get, but there are reasons why this method might not work for you. For one, you may not already have a large amount of savings. If you just Start your savings journeyYou may only have a few hundred dollars (or less) in your account — which is not ideal for CDs.

If your savings plan involves making regular contributions to your savings account — once a month, for example, or every time you get paid — a better option is a high-yield savings account. You can set up Automatic transfer From your checking account to your savings so you never have to miss out on incoming cash.

When you save something you buy sooner

Just like you want easy access to your money In case of emergencyIt also makes sense to maintain easy access if you’re saving for something in the near future.

a lot Best CD Rate Offered in CDs with terms ranging from six months to five years. While there are some CDs that have terms as short as one to three months, they won’t offer the best APYs — they’re often much lower than the rate you’ll get. High Yield Savings Account.

Say, for example, you’re saving for a vacation you want to take this year, a downpayment on a house you plan to buy in the summer, or wedding expenses you need to cover in the fall. You may benefit from one High Yield Savings Account These shorter timelines are given, so you’ll be able to recover your money when you need it. Plus, you’ll still earn higher interest rates in the meantime.

Compare today’s best savings account rates now.

Bottom line

In today’s high-rate environment, both high-yield savings accounts and CDs offer the chance to earn more than 4% on the money you save — and even more over the long term, e.g. The Fed continues to raise rates.

However, while each account type may have a place in your financial plan, they can play very different roles. If you’re considering a CD, make sure you won’t need the money for the entire account term to avoid penalty fees for early withdrawals. On the other hand, high-yield savings accounts can be ideal if you want a high-income account that you can contribute to over time and whenever you need to, especially if an emergency strikes.

Explore the accounts that best suit your savings needs with today’s top savings rates.

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