$10,000 in a high-yield savings account or $10,000 in a CD: Which one will earn more in one year?

When comparing a high-yield savings account (HYSA) to a certificate of deposit (CD) for a $10,000 deposit over one year, HYSA generally offers more earnings. As of now, a traditional savings account earns around 0.38% APY, while some HYSA accounts earn above 4% APY. For instance, a HYSA with a 4% APY would yield an extra $369 after a year, without additional contributions.

On the other hand, CDs currently average around 1.71% APY, with some 12-month CDs earning up to 4.15%. In this case, a $10,000 deposit in a competitive 12-month CD would earn $415 after one year, $244 more than a CD with an average rate. Despite the similar rates, the decision between HYSA and CD depends on individual preferences and goals.

HYSA offers variable interest rates, which can change throughout the year, while CDs provide a fixed APY for the entire term. However, CDs come with early withdrawal penalties, potentially eroding some or all of the interest earned. Additional factors to consider include minimum deposit requirements, promotional versus ongoing APYs, interest compounding frequency, and fees. Ultimately, the best choice for your $10,000 depends on your financial plans and needs.