$50,000 CD vs. $50,000 high-yield savings account: Here's which can earn more over the next year
In the volatile economic terrain of recent years, saving a large, five-figure sum of money wasn't easily achievable for many. And it was especially difficult to do for those looking to build their savings account to a milestone of $50,000. No matter how that was accomplished, however, whether it be through small but consistent contributions, a tax refund, a big bonus or a combination of other factors, savers will now want to pivot to their next steps in the process. That involves both protecting that principal and growing it with one of today's elevated interest rates. Fortunately, there are two primary ways to do both.
A certificate of deposit (CD) account, with a fixed interest rate often hovering above 4%, is one way. The other is with a high-yield savings account, which comes with a variable rate competitive with the top CDs, minus the accessibility restrictions that CD accounts require. To better determine the value each offers in today's economy, it helps to know the interest-earning potential of each over the next year. Below, we'll crunch the numbers that savers should know before getting started.
See how much interest you could be earning with a top-rate CD account here.
$50,000 CD vs. $50,000 high-yield savings account: Here's which can earn more over the next year
While calculating the interest of a CD is simple thanks to the account's fixed rate, some speculation will be required with the high-yield savings account, thanks to that account's variable rate. But with today's rates expected to hold for the foreseeable future, savers can still gain an approximate idea of what they can earn. Here's how much interest savers will earn with a $50,000 deposit into each, calculated against the top rates for each and the assumption that the high-yield savings account rate will hold through June 2027:
- $50,000 3-month CD at 3.95%: $486.60
- $50,000 high-yield savings account at 4.10% after three months: $504.80
- More profitable account: The high-yield savings account will earn $18.20 more.
- $50,000 6-month CD at 4.10%: $1,014.70
- $50,000 high-yield savings account at 4.10% after six months: $1,014.70
- More profitable account: Both accounts will earn the same amount of interest.
- $50,000 9-month CD at 4.00%: $1,492.62
- $50,000 high-yield savings account at 4.10% after nine months: $1,529.75
- More profitable account: The high-yield savings account will earn $37.13 more.
- $50,000 1-year CD at 4.15%: $2,075.00
- $50,000 high-yield savings account at 4.10% after one year: $2,050.00
- More profitable account: The CD will earn $25.00 more.
The CD account will only earn more interest in one of these three timelines, while the high-yield savings account will be more profitable in two, and interest earnings will be identical at the six-month mark. Still, the difference in earnings is negligible and, if rates decline over the next year, the high-yield savings account earnings will as well, which is something savers won't need to worry about with the fixed-rate CD.
Consider both carefully, then, as each comes with significant advantages and disadvantages in today's economy. It may also be worth evaluating the benefits of splitting the $50,000 into both accounts, which will allow you to earn a high rate with each while still maintaining a baseline of accessibility.
Learn more about your top savings account options now.
The bottom line
It likely took a lot of time, effort and sacrifice to build your savings toward the $50,000 mark, so you'll want to understandably benefit by storing it in the right, profitable place right now. Both CDs and high-yield savings accounts are worth serious consideration. Whichever choice you ultimately make, however, do your best to avoid traditional savings accounts. An update released this week shows the average rate there at just 0.38% this June, meaning that you're essentially losing money by not shifting your money into one of these high-rate alternatives instead.
