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Compare CD vs. savings account

Should you keep your money accessible or lock it away in exchange for a higher APY?

Cassidy Horton
Cassidy Horton

Updated

Fact checked

CDs and savings accounts were designed with the same purpose in mind — to help you save money. They both offer guaranteed returns and earn you some interest, but one gives you access to your money while the other locks it away until a set date.

What's in this guide?

What’s the difference between CDs and savings accounts?

Nearly every bank and credit union nationwide offers CDs and savings accounts. They both help you reach your savings goals, but keep these differences in mind:

CDsSavings accounts
Interest ratesHigherLower
ATM accessNoYes
FDIC or NCUA insuranceYesYes
Minimum depositsHigherLower
Ability to access fundsNoYes
Withdrawal penaltyYes. You’ll typically pay a penalty fee if you access your funds before maturity.Yes. You’ll typically pay a penalty fee if you make more than six monthly withdrawals.

Pros and cons of CDs

When you open a CD, you agree to lock your money away until it reaches maturity. This type of account carries the following benefits and disadvantages:

CD pros

  • High APYs. CDs typically have higher APYs than savings accounts, and the longer the CD term, the higher the interest rate.
  • No fees. Unlike savings accounts, CDs have no monthly fees or service charges because you can’t touch the funds until the term is up.
  • Flexible terms. Terms usually range from 12 months to 10 years, but some institutions may offer CDs with shorter or longer terms.
  • Locked-in rate. Your rate never changes with a CD, so you don’t have to worry about losing money if interest rates drop.

CD cons

  • Can’t access funds. Your money is locked away in a CD, and you’ll pay an early withdrawal penalty if you need to access it before maturity.
  • Higher minimum deposits. Minimum deposits vary, but most CDs have higher requirements than savings accounts.
  • No additional deposits. Once you open a CD, you can’t make any changes to the account, including adding more money.

Pros and cons of savings accounts

A savings account gives you limited monthly access to your money and carries the following benefits and disadvantages:

Savings account pros

  • More features. Unlike CDs, savings accounts offer ATM cards, mobile banking, direct deposit and more.
  • Lower minimum balances. Savings accounts have lower minimum balances than CDs.
  • Easy access. You can deposit or withdraw money into a savings account at any time.

Savings account cons

  • Lower APYs. You have monthly access to your money, but this benefit comes at the cost of lower APYs.
  • Monthly fees. Some banks may charge fees to maintain your account every month.
  • Excess withdrawal penalty. You’ll typically pay a fee if you make more than six withdrawals a month. But some banks are temporarily waiving this fee due to the coronavirus pandemic.
  • Interest rates fluctuate. Unlike CDs, your interest rate isn’t locked in, so you could earn more or less money if rates change.

Compare top-rated CDs and savings accounts

$
$
months
Name Product Interest rates (APY) Fee Minimum deposit to open Interest earned
American Express® High Yield Savings
Finder Rating: 4.6 / 5: ★★★★★
American Express® High Yield Savings
0.50%
$0
$0
Enjoy no monthly fees and a competitive APY with this online-only savings account. Accounts offered by American Express National Bank, Member FDIC.
Go to site
More Info
Aspiration Spend & Save Account
Finder Rating: 3.8 / 5: ★★★★★
Aspiration Spend & Save Account

1.00% on $0 to $10,000 but you’ll need to be enrolled in Aspiration Plus and make at least $1,000 in debit card purchases a month
$0 per month or $15 per month for Aspiration Plus ($12.50 per month if you pay annually)
$10
Deposits are fossil fuel-free and insured by the FDIC. Enjoy a spend and save combo account with unlimited cash back rewards and a $100 bonus when you spend $1,000 in your first 60 days.
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More Info
Axos Bank High Yield Savings
Finder Rating: 4 / 5: ★★★★★
Axos Bank High Yield Savings
0.61%
$0
$250
No monthly maintenance fees. No minimum balance requirements. Interest compounded daily.
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More Info
CIT Bank Money Market
Finder Rating: 3.9 / 5: ★★★★★
CIT Bank Money Market
0.45%
$0
$100
A savings account with a higher-than-average rate and minimal fees.
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More Info
CIT Savings Connect
Finder Rating: 4 / 5: ★★★★★
CIT Savings Connect

0.50% on + If you deposit $200+ monthly into your eChecking account, otherwise 0.42%
$0
$100
CIT Savings Connect combines aspects of a checking and savings account in one product.
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More Info
SoFi Money
Finder Rating: 4.3 / 5: ★★★★★
SoFi Money
0.25%
$0
$0
SoFi Money® is a cash management account that charges no account fees to save, spend, and earn cash back rewards when you spend on brands you love.
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More Info
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Compare up to 4 providers

Name Product 1-year APY 18-month APY 2-year APY 3-year APY 5-year APY
CIT Bank Term CDs
CIT Bank Term CDs
0.3%
0.3%
0.4%
0.4%
0.5%
Choose from a range of terms with no maintenance fees and $1,000 minimum to open.
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More Info
Radius Bank CDs
Radius Bank CDs
0.5%
0.5%
0.5%
0.5%
0.5%
Enjoy a low minimum deposit of $500 and earn 0.5% APY on your balance. Apply online for 1 year, 18 month and 3 year terms.
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More Info
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Compare up to 4 providers

How to compare CDs vs. savings accounts

As you shop around for CDs and savings accounts, keep these factors in mind:

Bottom line

Choose a savings account if you need monthly access to your money or are looking for a place to stash your emergency fund. You’re limited to six monthly transactions, but you can make as many deposits as you’d like and some accounts come with an ATM card.

If you’re certain you won’t need the money for a while and want to earn more, choose a CD. The APY is typically higher than savings accounts, but you’ll pay a hefty fee if you need the money before the term is up.

Once you decide which account you want to go with, either shop around for high-yield savings accounts or compare top-rated CDs.

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