$8,000 CD vs. $8,000 high-yield savings account: Which will earn more interest in one year?
Summary
An $8,000 deposit will earn similar interest over one year whether placed in a certificate of deposit (CD) or a high-yield savings account, with interest rates currently around 4%. CDs offer fixed rates but limit access to the money, while high-yield savings accounts have variable rates and allow withdrawals.Key Facts
- The average traditional savings account interest rate is about 0.38%, much lower than CDs and high-yield savings.
- CDs currently offer fixed interest rates around 4%, depending on the term length.
- High-yield savings accounts typically have variable rates near 4.1%, which can change over time.
- An $8,000 deposit in a 1-year CD at 4.11% earns about $328.80 in interest.
- The same deposit in a high-yield savings account at 4.10% earns about $328.00 after one year.
- Shorter-term CDs (3, 6, 9 months) yield interest amounts close to those from a high-yield savings account.
- The difference in interest earned between the two account types is very small.
- Choosing between them depends on whether you prefer fixed returns and restricted access (CD) or flexible access with variable rates (savings account).
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