$10,000 CD vs savings: The 1-year winner is barely ahead
A $10,000 deposit earns about $417 in a top 1-year CD or $410 in a high-yield savings account if current rates hold.
By Sal Moretti · Money Reporter
3 min read
The $10,000 CD vs savings call is close right now: a top 1-year certificate of deposit at 4.17% would earn about $417, while a high-yield savings account at 4.10% would earn about $410 over the same 12 months, according to CBS News calculations.
That puts the CD ahead by just $7, assuming the savings-account rate stays unchanged for the year. The tiny gap is the whole story for savers trying to squeeze more from cash without taking market risk.
The comparison looks livelier when set against the sleepy alternative. The average traditional savings account rate is 0.38%, according to the FDIC, meaning $10,000 left in a standard account would produce far less interest than either of the higher-rate options.
Which earns more on $10,000, a CD or high-yield savings account?
Based on the top rates cited by CBS News, the 1-year CD earns more: $417 at 4.17%, compared with $410 for a high-yield savings account at 4.10% after one year. The difference is small enough that account features may matter as much as the headline rate.
A CD locks in its interest rate until maturity. That gives savers certainty, but it also means the money is tied up for the term of the CD unless the bank’s withdrawal rules allow access, often with a penalty.
A high-yield savings account usually has a variable rate. That means the return can rise or fall after the account is opened, so today’s 4.10% rate is not guaranteed for the full year.
Why the savings account could still catch up
The CBS News calculation assumes the high-yield savings rate stays steady for 12 months. If those rates rise, the savings account could earn more than projected and potentially overtake the CD.
The savings account also allows the saver to add more money during the year, which could increase total interest earned. The CD comparison is based on a single $10,000 deposit held for one year.
The variable rate can work the other way, too. If high-yield savings rates decline, the CD’s fixed 4.17% would look better because its return would already be locked in.
What is the main trade-off?
The CD offers certainty on the rate for one year. The high-yield savings account offers more flexibility, but the rate can change.
For savers who know they will not need the cash for 12 months, the CD’s fixed rate may be attractive. For savers who want easier access to cash or plan to keep adding money, the high-yield savings account may be the cleaner fit.
CBS News reported that online banks often offer more competitive rates than banks with physical branches. For savers comparing either option, the rate, access rules, account fees and withdrawal terms can all affect the final return.
At current top rates, the math is not dramatic. A $10,000 deposit would earn roughly $410 to $417 over a year in the two higher-yielding accounts, far above what the average traditional savings account would provide at the FDIC’s reported 0.38% average rate.
This story draws on original reporting from CBS News.