The current economic climate makes it challenging for savers to decide whether to invest in the stock market or opt for safer options like certificates of deposit (CDs) and high-yield savings accounts. Two popular alternatives are $20,000 CDs and high-yield savings accounts. Both offer competitive interest rates, but they differ in terms of fixed versus variable rates, maturity requirements, and access to funds.
To determine which option earns more, let’s examine the interest earnings for a $20,000 deposit into each account type over various time periods. Based on available rates, here are the results:
* 3-month CD: $20,000 at 4.40% = $216.46; high-yield savings account at 4.30% = $211.62 (CD earns $4.84 more)
* 6-month CD: $20,000 at 4.49% = $444.07; high-yield savings account at 4.30% = $425.47 (CD earns $18.60 more)
* 9-month CD: $20,000 at 4.26% = $635.66; high-yield savings account at 4.30% = $641.59 (high-yield savings account earns $5.93 more)
* 1-year CD: $20,000 at 4.40% = $880.00; high-yield savings account at 4.30% = $860.00 (CD earns $20.00 more)
* 18-month CD: $20,000 at 4.26% = $1,291.52; high-yield savings account at 4.30% = $1,303.77 (high-yield savings account earns $12.25 more)
In six of the ten time periods examined, the CD outperforms the high-yield savings account. However, it’s essential to note that other CD terms may have different dynamics. Additionally, high-yield savings accounts are subject to variable rates, which may change over time.
Ultimately, both CDs and high-yield savings accounts offer attractive options for savers with $20,000 to invest. If you prioritize a fixed return, a CD might be the better choice. However, if you’re looking for a higher potential return that can fluctuate, but still allows access to your funds, a high-yield savings account could be more suitable. Some investors may consider diversifying their portfolios by allocating their $20,000 between both options.
Source: https://www.cbsnews.com/news/20000-cd-vs-20000-high-yield-savings-account-which-earns-more-july-2025