$10,000 3-month CD vs. $10,000 high-yield savings account: Which earns more interest now?

Both CD and high-yield savings accounts offer high rates for savers right now. Getty Images

Certificate of deposit (CD) accounts come with high interest rates that remain fixed for the full term, regardless of what happens in the rate climate during that period. High-yield savings accounts, meanwhile, also come with high rates right now, but the rates there will be variable and subject to change based on market conditions. Still, savers will maintain flexibility and access to their funds with the latter account but will have to forgo it with the former account or risk having to pay costly early withdrawal penalties.

Understanding how these accounts work, however, is only part of the equation when trying to determine which will make a better home for your money in today's economy. The other part worth examining, especially for a larger, five-figure deposit like $10,000, is which will earn more interest. With this large of a deposit, you'll want to make sure to earn as much as you can, even if it means potentially sacrificing access to your funds for 90 days or less, approximately. 

Between a $10,000 3-month CD and a $10,000 high-yield savings account, then, which will earn more interest if opened now? Below, we'll crunch the numbers.

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$10,000 3-month CD vs. $10,000 high-yield savings account: Which earns more interest now?

Calculating the interest earnings on a CD is simple to do thanks to that fixed rate, but it becomes more complicated with a high-yield savings account, as variability will need to be accounted for. But when matching a 3-month CD and a high-yield savings account for the same amount of time, it becomes less difficult, as high-yield savings accounts aren't expected to drop dramatically over such a short period. 

Here, then, is how much each account can earn if opened now, assuming no early withdrawal penalties are issued against the CD and that the high-yield savings account rate remains the same for the full three months:

• $10,000 3-month CD at 4.25%: $104.60
• $10,000 high-yield savings account at 4.30% after three months: $105.81
• Difference between accounts: The high-yield savings account earns $1.21 more

So, while the high-yield savings account technically earns more, the difference between the two account earnings is negligible. Additionally, the CD interest will be guaranteed, while the high-yield savings account earnings will not be. And with interest rate cuts looming for later this summer and into the fall, it may not be advantageous to deposit money into an account in which rates will fall when you can still lock in a high rate with a CD. 

That said, if rate predictions are reversed and rate hikes look more likely alongside a growing inflation rate, high-yield savings account holders could be poised to benefit in a way that CD account holders will not be. So, savers contemplating both should look beyond the potential interest earnings and focus more on which account type meets the goals and immediate financial needs.

Compare your CD and high-yield savings account offers online to learn more.

The bottom line

The earning potential with a $10,000 3-month CD and a $10,000 deposit into a top high-yield savings account is roughly identical this August. But that doesn't mean that those potential earnings will remain as closely aligned as they are currently. Savers should take a strategic view of both account types, then, before getting started. In some circumstances, it may even be advantageous to split that amount of money in half, allowing you to take advantage of what both accounts offer while still maintaining a level of flexibility, all while earning a high rate on your hard-earned $10,000.