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Sep 3, 2021
Personal Finance

CDs versus High Yield Savings

Should you choose a certificate of deposit or a high-yield savings account? That is a question. A certificate of deposit, or CD, won’t give you as much flexibility for withdrawals and general access to your savings. On the other hand, high-yield savings affords you ease of access, but it comes with its own disadvantages.

Let’s take a closer look at the two types of accounts and which is best for you.

What is a CD Account?

A CD is a type of savings account that can offer high-interest returns - typically much higher than a standard savings account. But that is not to say CDs are without drawbacks. A significant disadvantage to keep in mind is restricted access. During the agreed-upon term of the CD account, usually anywhere from 3 months to 5 years, you won’t be able to easily withdraw your money. If you do need to take out your money before its maturity, you’ll just have to forfeit some of the interest or pay a penalty that removes much of the gain. 

CDs also provide a locked rate during their term, though that isn’t always a good thing. If interest rates increase during the term of the CD, you may find yourself earning less than other savings options. 

What is a High-Yield Savings Account? 

A high-yield savings account is a savings account with a little extra juice. The interest may not be as high as CD accounts, but you have complete access to your money when you need it, subject to a federally imposed monthly limit of six withdrawals. If you do need to exceed six withdrawals in a month, no problem. Banks will usually just charge you a small fee for each additional withdrawal. 

Unlike CDs, high-yield savings accounts typically offer variable rates that go up and down depending on the interest rate environment. 

An example of a high-yield savings account right now is Atmos, offering up to 0.51% returns! Not only that, but the money you entrust in your account with Atmos is used to create positive environmental and social impact to reduce your carbon footprint and reverse global warming. Atmos allows you to earn higher yields and monitor your carbon impact

CD vs High-Yield Savings

Let’s compare the statistics between the two accounts to help you make a more informed decision.

Interest Rates

CD accounts offer higher interest rates, but how much higher can you expect? A standard savings account can offer rates that are as low as 0.04% with the high-interest options bringing returns up to 0.51%.

CD rates can vary between 0.5% and 1.5% depending on the duration. However, you should keep in mind that these rates are fixed for the duration of the CD period while the rates for savings accounts can be subject to change, going up or down.

Flexibility and Access

CDs and savings accounts have varying degrees of flexibility and access. We already know savings accounts allow you to withdraw money at any time, subject to a federal limit of six monthly withdrawals. CDs on the other hand have limited access throughout their term unless the account holder is willing to pay higher fees. 

Opening Fees

It’s typically easier to open a high-interest savings account than a CD. A certificate of deposit may require a minimum balance as much as $1,000. For savings accounts, the balance could be as low as $100 to get started, and in the case of Atmos, there is no minimum balance! 

Which Should You Choose?

So, which should you choose? A CD is recommended for individuals who can afford to wait. You should plan on leaving your money in the account for the duration of the period, for months or years. The longer the length, the higher the interest. If you really want to earn a higher rate, you should be comfortable leaving your money for a longer period of time. If you might miss that money, a high interest savings account may be the path for you. 

Your interest rates are locked in for that time, which offers some security if the rates fall but you will also lose out on higher earnings if rates rise. Depending on the term and your rate, you could end up earning the same amount or even less than if you had chosen a high-interest savings account.

Go for a high-yield savings account if the above sounds too risky or disadvantageous. If you feel you may need access to your money at any time, then a savings account is the way to go. If you’re looking to invest your emergency fund in a high-yield savings account, an online option like Atmos may be a good option. After all, emergency funds are meant to be spent on a rainy day, and limiting access to your money is counter-intuitive. In addition to nationally leading rates, your money will help reverse global warming. 

Frequently Asked Questions

Why would you choose a CD instead of a savings account?

You would choose a CD instead of a savings account if you know that you won’t need to touch the money for a while. Due to their locked duration, CDs are often able to offer higher interest rates. While that’s good if rates stay low, a rate in a CD wouldn’t gain if rates increase. 

Is a CD better than a high yield savings account?

Not necessarily. A CD provides a higher rate of return than a high yield savings account, but they lack flexibility. While high-yield savings accounts may not offer as high of an interest rate, there are generally no restrictions and you won’t be charged any fees if you need to access those funds. 

When are savings rates higher than CDs?

Some savings rates can grow to be higher than CDs because their interest rates aren’t fixed. This means that if there is a notable rise in the interest rate environment, the rate for a high-yield savings account may start to exceed those offered in an older CD. As a rule of thumb, we discourage any interest rate speculation for purposes of choosing between a savings account or CD.


Both CDs and high-yield savings can offer great returns, but the type of account you pick will depend on your unique circumstances. Atmos offers a great example of high-yield savings that doesn’t require a minimum balance or charge fees. Your money can also be used to fund environmentally-friendly causes and reduce your carbon footprint.

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