The Real Trade-Off: Rate Lock vs Flexibility
CDs and high-yield savings accounts (HYSAs) are both insured, low-risk places for cash. The difference is commitment. A CD locks your rate and your money for the term — great when rates are falling, painful if you need the cash. An HYSA stays fully liquid, but the bank can cut the rate whenever the market moves.
How to Read the Comparison
This calculator compounds both options at their advertised APY over your chosen period. But the dollar gap it shows assumes the savings rate stays put — in reality that number floats. If the Federal Reserve cuts rates, HYSA yields usually drop within weeks, while your CD keeps paying its locked rate to maturity.
Rules of Thumb
- Emergency fund → HYSA, always. Never lock money you might need tomorrow.
- Cash with a known future date (tuition, house down payment in 2 years) → CD matching that date.
- Rates falling → favor CDs to lock today's yield. Rates rising → favor HYSA or short CDs so you can reprice.
- Can't decide? Split it — or build a CD ladder for the best of both.