CD vs High-Yield Savings Account Calculator

Two simple products that often confuse savers

A CD and a HYSA both pay interest on cash deposits. Both are FDIC-insured up to $250,000 per depositor per bank. Both are completely safe. The differences are about timing, liquidity, and rate behavior.

When a CD wins

CDs lock in today’s rate. If you believe rates are heading down (Fed cutting cycle), a 12-month CD at 5% beats a HYSA that might drop to 3.5% in 6 months. The lock-in is the feature.

Historical example: in late 2023, savers who locked into 5.25% 12-month CDs caught the rate peak. HYSA rates that were 5.0% then are 4.0-4.3% in mid-2024 as the Fed signals cuts.

When a HYSA wins

If rates rise, the HYSA goes up automatically. You also get full liquidity: withdraw any amount, any time, no penalty. For an emergency fund or money you might need on short notice, this is non-negotiable.

A HYSA also avoids the “what if I need it” tax. CDs technically pay slightly higher rates because of the illiquidity, but if you crack a 5% CD at month 6 and lose 3 months of interest, you have effectively earned 1.25% on that money for the year, which is worse than the HYSA at 4.5%.

The math: $10,000 in a 12-month example

“From month 7” means month 7 is the first month at the new rate, so six months run at each. That is the convention the calculator uses too.

The lock-in advantage on a 12-month CD is roughly 0.5 to 1.0 percentage points in a falling-rate environment, and close to nothing in a stable or rising one. Look at the fourth row: a HYSA that rises to 5.5% halfway through still ends up a fraction behind the 5% CD, because it spent the first half of the year at 4.5%. Rate timing matters less than people expect over a single year.

The CD laddering strategy

For larger cash holdings ($25k+), CD laddering combines the best of both worlds:

• Divide cash into 4 equal portions
• Buy 3-month, 6-month, 9-month, and 12-month CDs
• When each matures, roll into a new 12-month CD
• After year 1, you have one CD maturing every 3 months

Benefits: continuous access to 25% of the money every quarter, average rate close to longest CD, no commitment loss if rates change mid-cycle.

This works particularly well with brokered CDs from Treasury Direct, Schwab, or Fidelity, where you can shop the best rates across hundreds of banks without opening accounts at each.

A snapshot of the rate landscape, mid-2024

Rates move, and these are a record of one moment rather than what you will be quoted today. Check current numbers before you commit. What is durable here is the shape: short CDs above HYSAs, long CDs below short ones when the market expects cuts, and Treasuries competitive with both once you account for tax.

Note that brokered CDs and Treasury bills often beat both retail CDs and HYSAs. Treasury bills also have the bonus of state tax exemption, which is worth real money in California, New York or Hawaii.

The brokered CD advantage

Brokered CDs from Schwab, Fidelity, or Vanguard:

• No-fee account access to CDs at hundreds of banks
• Often rates 0.3-0.7% higher than the bank’s own retail CDs
• Liquid secondary market. If you need out early you sell to another buyer, at whatever price the market gives you, rather than paying a withdrawal penalty
• Same $250k FDIC coverage as direct bank CDs

The downside: brokered CDs don’t auto-renew, and the secondary market price can be lower than face if rates have risen.

Early withdrawal penalties, the part people forget

Standard CD early withdrawal penalties:

A 12-month CD at 5% has a 3-month interest penalty of about 1.25% of principal. If you redeem after month 4, you have effectively earned about 0.4%, which is worse than any HYSA. A CD only works if you can hold it to maturity.

Treasury bills, the option nobody mentions

For maturities under 1 year, T-bills frequently beat CDs:

• Backed by the full faith and credit of the US government (highest credit quality)
• Rates often slightly above 12-month CDs
• Exempt from state and local income tax (saves 4-11% depending on state)
• Available in $100 increments via TreasuryDirect.gov

A 12-month T-bill at 5.2% in California (13.3% state tax bracket) is equivalent to a 6.0% CD on after-tax basis. For high earners in high-tax states, T-bills are usually the right call.

Where people usually end up

Rate leaderboards churn constantly, so treat names as starting points rather than recommendations:

• Chasing the top rate: the smaller online-only banks, which trade places month to month
• Established names: Ally, Marcus by Goldman Sachs, Capital One 360
• Good if you want checking in the same app: SoFi, Discover, Ally
• Worth avoiding: any account with a minimum balance requirement or a monthly fee, since those quietly cost more than the rate difference you were chasing

Choosing between them

For an emergency fund: HYSA. Always. The liquidity is the feature.

For known-timeline savings (down payment in 12 months, wedding in 18 months): CD or T-bill, depending on rate and tax situation.

For larger holdings ($50k+): consider CD laddering or brokered CDs/T-bills via Schwab/Fidelity to get the best rates.

In a falling-rate environment: bias toward locking in longer-term CDs.

In a rising-rate environment: bias toward shorter CDs or HYSA.