$8,000 CD vs. $8,000 high-yield savings account: Which will earn more interest in one year?

Whether you have tens of thousands of dollars saved right now – or a smaller amount such as $8,000 – you’ll want to make sure that it’s being kept in a secure and profitable location. And it’s increasingly obvious that a traditional savings account, with a current average rate of just 0.38%, isn’t that place. Investing it in stocks and bonds, meanwhile, could translate into big gains or large losses, as the stock market responds to geopolitical tensions, overseas conflicts and a rising inflation rate.

In this climate, a certificate of deposit (CD) and a high-yield savings account merit serious consideration. Interest rates on both sit around 4% currently, and with a CD account, the rate will be fixed, allowing savers to calculate their long-term interest earnings with precision. Savers will need to forego access to their money to earn that rate, however, which is something they won’t have to do with a variable-rate high-yield savings account. 

Before depositing your $8,000 into either account type, then, or before splitting your funds between both, it helps to know the interest-earning potential each presents with a deposit of this size. Below, we’ll crunch the numbers that savers should know before getting started.

Start earning more interest on your money with a high-yield savings account here.

$8,000 CD vs. $8,000 high-yield savings account: Which will earn more interest in one year?

While determining the interest-earning potential of a variable rate account can be difficult to complete with accuracy, with rates here largely expected to hold over the next year, savers can still gain a reasonable approximation of what they stand to earn with an $8,000 high-yield savings account. CD rates, however, will allow for precise interest-earnings calculations, though the rate won’t change even if rates increase later this year (unlike the high-yield savings option). 

Here’s how an $8,000 deposit into each will grow over the next 12 months, calculated against today’s top rates, four different CD terms and the assumption that no account fees or penalties are issued against either:

• $8,000 3-month CD at 3.90%: $76.88
• $8,000 high-yield savings account at 4.10% after three months: $80.77
• Most profitable account: The high-yield savings account will earn $3.89 more.

• $8,000 6-month CD at 4.10%: $162.35
• $8,000 high-yield savings account at 4.10% after six months: $162.35
• Most profitable account: Both accounts will earn the same amount of interest.

• $8,000 9-month CD at 4.00%: $238.82
• $8,000 high-yield savings account at 4.10% after nine months: $244.76
• Most profitable account: The high-yield savings account will earn $5.94 more.

• $8,000 1-year CD at 4.11%: $328.80
• $8,000 high-yield savings account at 4.10% after one year: $328.00
• Most profitable account: The CD will earn $0.80 more.

The high-yield savings account will earn more interest in two of these four scenarios, while the CD will be more profitable after one year, and the interest amount will be identical after six months. That noted, the earnings differential between the two accounts is negligible. 

Savers should look beyond these earnings, then, and make a decision based on which type of account they prefer: One with a fixed rate that will protect their money regardless of market conditions or one with a variable rate that won’t limit access. There is no uniform guidance that will apply to each saver. Explore both options carefully, then, and don’t discount the advantages of splitting your funds among both accounts, too.

Learn more about your current CD account options here.

The bottom line

Interest earnings on a $8,000 deposit will look similar regardless if the money is deposited into a CD or a high-yield savings account. Savers should take a broader approach, then, and consider the structure of these accounts as well to best decide on which makes the most sense for their financial needs and goals right now. For some, it may still be the CD account, while others may find the slightly more profitable high-yield savings account preferable, and other savers may decide that a mix of funds between both is best. Whatever you ultimately decide, however, just be sure to keep the funds in the traditional account limited, as you’re essentially losing money by not making the shift into one of these high-rate alternatives instead.