$75,000 CD vs. $75,000 high-yield savings account: Which will earn more interest over the next year?
Summary
Putting $75,000 into a one-year certificate of deposit (CD) at 4.40% interest will earn about $225 more than putting the same amount in a high-yield savings account at 4.10% interest over one year. However, a savings account’s interest rate can change over time, possibly increasing if the Federal Reserve raises rates, while a CD rate stays fixed for the term.Key Facts
- A one-year CD at 4.40% interest on $75,000 will earn about $3,300 in interest.
- A high-yield savings account at 4.10% interest on $75,000 will earn about $3,075 in interest over one year.
- The CD will earn $225 more than the high-yield savings account if rates stay the same.
- High-yield savings accounts have variable rates that can change with market conditions.
- The Federal Reserve might raise interest rates in September, which could increase savings account rates.
- CDs have fixed rates that remain the same until the term ends, regardless of market changes.
- Splitting money between CDs and savings accounts can balance the benefits of fixed and variable rates.
- Traditional savings accounts earn much less interest, about 0.38%, which offers minimal growth.
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