Interest rates have fallen significantly recently. If you’re looking for a way to continue earning a high APY on your savings, certificates of deposit (CDs) are a popular choice. These allow you to lock in an interest rate for the entire term of the CD.

The highest paying CDs always offer impressive rates. Some short-term CDs earn APYs of 4.5% to 5%. But CDs don’t give you access to your money at any time, so they’re not the right place to put the bulk of your savings. Here’s a better option.

Open a high-yield savings account for flexibility and a competitive APY

The big disadvantage of CDs is that you cannot make any withdrawals before the maturity date. For example, if you open a one-year CD, you have to keep your money in it for one year. If you need your money sooner, you will be charged an early withdrawal penalty. This is the price you pay for a guaranteed APY.

Because of this limitation, a CD is not a good choice for savings you might need at any time. You wouldn’t want to put your emergency fund on a CD, to give you an example. If an emergency arises halfway through the term of your CD, you’ll pay a penalty to withdraw your money.

Our picks for the best high-yield savings accounts of 2024

American Express® High Yield Savings APY 4.00% Pricing information Annual percentage yield of 4.00% as of November 18, 2024 Member of the FDIC.	APY 4.00% Pricing information Annual percentage yield of 4.00% as of November 18, 2024	Min. earn $0
Capital One 360 ​​Performance Savings APY 4.00% Pricing information Check the Capital One website for the most up-to-date pricing. The Advertised Annual Percentage Yield (APY) is variable and accurate as of October 23, 2024. Rates are subject to change at any time before or after account opening. Member of the FDIC.	APY 4.00% Pricing information Check the Capital One website for the most up-to-date pricing. The Advertised Annual Percentage Yield (APY) is variable and accurate as of October 23, 2024. Rates are subject to change at any time before or after account opening.	Min. earn $0
CIT Platinum Savings APY 4.55% APY on balances of $5,000 or more Pricing information 4.55% APY on balances of $5,000 or more; otherwise, 0.25% APY Min. earn $100 to open an account, $5,000 for maximum APY Member of the FDIC.	APY 4.55% APY on balances of $5,000 or more Pricing information 4.55% APY on balances of $5,000 or more; otherwise, 0.25% APY	Min. earn $100 to open an account, $5,000 for maximum APY

You won’t have this problem with a high-yield savings account. This type of account allows you to withdraw your money penalty-free at any time, and you can still earn a high APY. Many high-yield savings accounts have rates equal to or better than those offered by CDs.

Are you looking for a high-yield savings account? Consider Western Alliance Bank’s High-Yield Savings Premier account. It has one of the highest rates I’ve found with an APY of 4.46% and there are no monthly fees. Click here to learn more and open an account today.

Invest your savings for the long term to earn even more

High-yield savings accounts are a good choice for the money you’ll use over the next few years. To save long term, some people opt for CDs to benefit from a guaranteed rate. Once again, there is potentially a better option: investing in the stock market.

As of this writing, you can earn 4-5% per year with high-yield savings accounts and CDs. The U.S. stock market, represented by the S&P 500, has averaged an increase of about 10% per year over the past 50 years. Here’s what difference it makes on a $10,000 investment:

• After 30 years in a 5% annual returnyou would have $43,219.
• After 10 years in a 10% annual returnyou would have $174,494.

The stock market is volatile – it’s not a guarantee of 10% per year. This could reach 30% one year and decrease by 15% the following year. But over the long term, this averages out to around 10% per year. As you can see, this makes a huge difference in the amount you earn. With long-term savings, like your retirement, investing is the obvious choice.

You can invest through a traditional brokerage account or an individual retirement account (IRA). If you don’t already have an IRA, you probably should, as it can help you save taxes. And right now, Robinhood offers an IRA match to help you boost your retirement savings. Learn more and open an account here.

Getting the most out of your savings

Even with interest rates falling, don’t feel like you have to put your money in a CD. Although CDs work well for some, they are not suitable for everyone due to early withdrawal penalties.

Personally, I do exactly what I described above. My short-term savings and emergency fund are in a high-yield savings account. The money I set aside for long-term wealth creation is invested. It’s a simple approach that works for most people.