$100,000 short-term CD vs. $100,000 high-yield savings account: Which will earn more this year?

Investing $100,000 into the stock market or alternative investments may make sense in a traditional economic climate. But reports this week showed that that’s far from where many savers find themselves right now. With inflation surging for the second month in a row and now sitting at its highest level in three years, savers may understandably be looking to protect as much of their money as possible. And while, in a different time, investing a six-figure sum of money may have made financial sense, right now, protecting it with a high-rate savings account may be preferable.

And there are two viable ways to do just that in today’s still-elevated interest rate climate: a certificate of deposit (CD) and a high-yield savings account. A short-term CD, in particular, can be advantageous now as it won’t lock up your money for more than a few months. That will allow you to earn a big return while still allowing you to shift your savings strategy before the end of the year. A high-yield savings account, meanwhile, won’t require you to lock your funds at all, allowing you to maintain the same level of access you’ve been accustomed to with a traditional savings account.

Between the two options, then, which will actually earn more interest this year – a $100,000 short-term CD or a $100,000 high-yield savings account? Below, we’ll crunch the numbers.

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$100,000 short-term CD vs. $100,000 high-yield savings account: Which will earn more this year?

Short-term CD accounts come with terms that mature in 12 months or less, but like all CD accounts, they also have a fixed interest rate that will hold until that maturity date. In contrast, high-yield savings accounts have variable rates that will change over time. But with today’s rate climate seemingly cemented through the end of the year, savers can still gain a reliable approximation of what they stand to earn in interest. 

Here’s how much a $100,000 deposit into each will earn now, calculated against today’s top rates, and the assumptions that the high-yield savings account rate holds and that no fees or penalties are levied against either:

• $100,000 3-month CD at 3.90%: $961.06
• $100,000 high-yield savings account at 4.03% after three months: $992.62
• Most profitable account: The high-yield savings account

• $100,000 6-month CD at 4.10%: $2,029.41
• $100,000 high-yield savings account at 4.03% after six months: $1,995.10
• Most profitable account: The CD account

While a 9-month CD will mature in early 2027, it can also be helpful to know the interest-earning potential there, using the same parameters as outlined above:

• $100,000 9-month CD at 4.00%: $2,985.24
• $100,000 high-yield savings account at 4.03% after nine months: $3,007.52
• Most profitable account: The high-yield savings account

In two of these three scenarios, then, the high-yield savings account will be more profitable for your $100,000. And while it may be risky to assume this in a market when interest rate cuts are likely or even imminent, that’s simply not the market savers find themselves in right now. 

That makes the above projections more realistic than they would otherwise be. At the same time, the profit-earning differential between both accounts isn’t stark, and savers who want to be able to rely on their earnings may understandably find the short-term CD to be the better option. Evaluate both carefully, however, before making a final decision. It’s important to choose the right account here, as an early withdrawal penalty on a CD of this size could be costly.

Compare your CD and savings account options here to learn more.

The bottom line

A $100,000 high-yield savings account will be more profitable than a short-term CD after three or nine months, but the CD will be slightly more lucrative after six months. In other words, both accounts can serve as viable and lucrative homes for your money now, especially if you’re looking to circumvent today’s market volatility. Consider both carefully before getting started, and don’t discount the advantages of splitting your funds between both types to take advantage of the features each offers, too.