$10,000 1-year CD vs. high-yield savings account: Which earns more interest?

For savers with $10,000, choosing between a 1-year certificate of deposit (CD) and a high-yield savings account could yield slightly different returns. Both account types currently offer competitive interest rates, hovering around 4%.

A 1-year CD, with its fixed interest rate, promises a predictable return. For a $10,000 deposit at a 4.17% annual rate, a CD would earn $417 over the year. This offers a sense of security in an uncertain economy, protecting the principal while providing a modest profit.

In contrast, a high-yield savings account typically offers a variable rate. While currently around 4.10%, this rate could fluctuate. Over one year, a $10,000 deposit at this rate would yield approximately $410. Although slightly less profitable in this specific comparison, a high-yield savings account offers greater flexibility, allowing access to funds without penalty.

The slight edge in earnings goes to the CD in this scenario, offering an additional $7 over the 12-month period. However, the decision may hinge on individual priorities: the certainty of a fixed return with a CD versus the flexibility of a variable rate with a high-yield savings account.