Full Article Link: CBS News – $10,000 CD vs. $10,000 High-Yield Savings Account: What Experts Recommend Now
Quote from Stephan Shipe
“There is a slightly higher expected return on CDs because of the premium paid to an investor for locking up their money.”
—Stephan Shipe, Founder of Scholar Financial Advising
Key Takeaways
- High-yield savings accounts (HYSAs) offer easy access to your money, making them better suited for emergency funds or uncertain income situations. They’re flexible, have fewer management requirements, and provide liquidity without penalty.
- Certificates of deposit (CDs) are ideal when you want to lock in a higher, fixed interest rate—especially if you believe rates will fall. While they offer better returns, they require tying up your money for a set period and may penalize early withdrawals.
- Stephan Shipe emphasizes the value of CDs in the current rate environment, noting the slightly higher expected return due to the commitment required. CDs can be an effective tool for savers who don’t need immediate access to funds.
- A blended approach using both HYSAs and CDs—or building a CD ladder—can provide liquidity and higher returns. This strategy works well for larger cash holdings or for those who want flexibility and income.
- With interest rate cuts likely ahead, locking in current CD rates may be a smart move before yields decline further.