$50,000 CD vs. $50,000 high-yield savings account: Which earns more interest now?

It can take an extended, concentrated effort to save any amount of money. But if you can save a significant, five-figure sum, you should be proud of your accomplishment. You should also look to take advantage of it as best you can by making that money work for you in today’s still elevated interest rate environment. And while stock market returns on a $50,000 investment, for example, can be robust, they can also be volatile and difficult (and stressful) to rely on. Fortunately, there are still attractive, reliable savings vehicles in which your principal will remain the same and the interest earnings can be substantial.

Certificate of deposit (CD) and high-yield savings accounts both offer savers strategic ways to grow their money right now. And while they may not be thought of as conventional homes for a $50,000 deposit, today’s economy is far from conventional and many savers may be content with exchanging the volatility of the stock market for a smaller but more consistent return with one of these accounts. That said, they don’t function in identical ways and the interest rate structure on each is different. 

Before getting started, then, it helps to calculate the interest-earning potential each can offer now with a $50,000 deposit. Below, we’ll do the math.

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$50,000 CD vs. $50,000 high-yield savings account: Which earns more interest now?

Interest rates on CDs are fixed, meaning that they will remain the same for the full CD term regardless of any rate changes in the market during that period. Interest rates on high-yield savings accounts are variable, meaning that they’ll adjust over time based on market conditions. Here’s what each could earn now, calculated against available interest rates and on the assumption that no early CD early withdrawal fees are issued against the CD account and that the high-yield savings account rate remains consistent over time:

• $50,000 3-month CD at 4.30%: $529.04
• $50,000 high-yield savings account at 4.35% after three months: $535.10
• Difference between accounts: The high-yield savings account earns $6.06 more.

• $50,000 6-month CD at 4.45%: $1,100.39
• $50,000 high-yield savings account at 4.35% after six months: $1,075.92
• Difference between accounts: The CD earns $24.47 more.

• $50,000 1-year CD at 4.40%: $2,200.00
• $50,000 high-yield savings account at 4.35% after one year: $2,175.00
• Difference between accounts: The CD earns $25.00 more.

• $50,000 18-month CD at 4.16%: $3,152.23
• $50,000 high-yield savings account at 4.35% after 18 months: $3,297.73
• Difference between accounts: The high-yield savings account earns $145.50 more.

• $50,000 2-year CD at 4.10%: $4,184.05
• $50,000 high-yield savings account at 4.35% after two years: $4,444.61
• Difference between accounts: The high-yield savings account earns $260.56 more.

So, while the high-yield savings account can earn more in four of the above six scenarios, there’s no guarantee that it will. And, for extended periods, it’s more likely that it won’t, particularly if interest rate cuts are reintroduced to the market later this year. Understanding this dynamic, savers will need to weigh the guaranteed (but slightly smaller) returns they can secure with a CD against the seemingly higher but volatile ones they may be able to earn with a high-yield savings account. With $50,000 at play, it’s important to make the right decision.

Learn more about your high-yield savings account options here.

The bottom line

Both CD and high-yield savings accounts offer savers a viable home for their $50,000 right now. But only a CD will guarantee big returns on that deposit, while a high-yield savings account will be subject to market conditions that could impact the interest-earning potential in a material way. Weigh the pros and cons of each account before getting started and, more importantly, avoid keeping this much money in a traditional savings account. With an average rate under 0.40% there now, you’re essentially losing money by keeping a large, five-figure amount in one of those accounts currently.