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Difference Between High Yield Savings and CDs

Video Transcript

Hey, this is Chris with Money Burst, today let's compare high yield savings accounts against certificates of deposit, or CDs, to see which one of these options might be the best fit for your savings goals.

High yield savings accounts are like your standard savings account, but with a twist, they offer a much higher interest rate than traditional savings accounts. This means that your money grows even faster over time. They're great for flexibility since you can access your funds at any time without penalty, making them perfect for short-term goals or your emergency fund.

On the flip side we have CDs, which are a little more rigid. You commit your money for a set period of time, like 6 months or 5 years, and in return you get a fixed, and oftentimes, higher interest rate. The downside is, if you pull your money out early, you're probably going to face a small penalty. CDs are best for money that you won't need anytime in the near future.

So, which one should you choose? If you need regular access to your money and prefer flexibility, go for a high yield savings account. But if you can set your money aside for a longer period and want a little bit more interest, a CD could be the better option.