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Banking

CDs vs. Money Market Accounts vs. High-Yield Savings Accounts: Where can your money earn the most interest?

If you want to earn the highest APY for your savings, you may have to make a few small trade-offs.

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Like folding your laundry or eating your vegetables, saving your money is a boring but important part of being a responsible adult. But you can spice things up a bit by putting your savings in a deposit account that earns you money for doing the right thing.

Three popular places to save money are in a CD account, money market account and a high-yield savings account. Each account comes with a few key differences and the returns you receive can vary. Here's a breakdown of what you need to know about each account and which account can help you earn the highest APY.

What we'll cover

What are the differences between a money market account, a CD and a high-yield savings account?

All three accounts share a basic premise — you deposit money and then earn a specified return on your money paid in interest. But when you dig a little deeper, you quickly see that the differences between the accounts make each one suited for a different need.

High-yield savings accounts

Best for when you want a balance between a high APY and easy access to your money

These accounts offer higher APY's compared to traditional savings accounts. In other words, your money can grow faster even when it's simply sitting in your account. However, just like a traditional savings account, the APY you receive fluctuates based on how the bank reacts to factors such as the benchmark interest rate set by the Federal Reserve.

One of our top picks for high-yield savings accounts is LendingClub High-Yield Savings, which you can open with a minimum deposit of $100 (and after that, there's no minimum balance requirements to keep the account open).

LendingClub High-Yield Savings

LendingClub Bank, N.A., Member FDIC
  • Annual Percentage Yield (APY)

    5.00%

  • Minimum balance

    No minimum balance requirement after $100.00 to open the account

  • Monthly fee

    None

  • Maximum transactions

    None

  • Excessive transactions fee

    None

  • Overdraft fees

    N/A

  • Offer checking account?

    Yes

  • Offer ATM card?

    Yes

Terms apply.

Another good choice we recommend is The Western Alliance Bank Savings Account — it earns one of the highest APYs we've seen and only requires a $1 minimum deposit to open.

Western Alliance Bank Savings Account

Western Alliance Bank is a Member FDIC.
  • Annual Percentage Yield (APY)

    5.28% APY

  • Minimum balance

    $1 minimum deposit

  • Monthly fee

    None

  • Maximum transactions

    Up to 6 transactions each month

  • Excessive transactions fee

    The bank may charge fees for non-sufficient funds

  • Overdraft fee

    No overdraft fee

  • Offer checking account?

    No

  • Offer ATM card?

    No

Terms apply.

While you can't lock in the APY of a savings account, you can deposit additional money and withdraw your money at any time for no penalty (though, some accounts may have monthly withdrawal limits and you may incur a fee for excessive transactions).

CD accounts

Best for when you want to lock in an APY and don't need your money quickly

Short for certificate of deposit, CDs tend to offer higher APY's compared to high-yield savings accounts. But there's a catch: Your money must stay locked up in the account for a specified period of time in order to earn the APY. Withdrawing your cash early may incur a fee. For this reason, a CD account isn't the best type of account to house your emergency fund, since you usually can't withdraw your money at will without paying a price.

While the APY a financial institution offers on a CD account will change with the broader interest rate environment, the moment you make a deposit into a CD you lock in the current rate (unless it's a variable-rate CD). This makes it a smart move to deposit money in a CD account when interest rates are high, but you suspect they may begin to fall.

This makes it a bit easier to control how much you earn on your money if you were to make a deposit during a high APY climate. Another thing to keep in mind is that once your money is deposited, you cannot go back and make additional deposits, unlike with high-yield savings accounts.

Money market accounts

Best for when you want the features of a checking account with the high APY of a savings account

This account type shares many features with the high-yield savings account — deposit cash any time and earn a high APY on your balance — but a money market account also provides easy access to your money similar to a checking account.

With a money market account, you can usually write checks, use a debit card and access a network of ATMs. CDs and high-yield savings accounts rarely boast these features, which is why money market accounts are the best choice for someone who wants to withdraw their money with the least amount of fuss.

Money market account customers earn a higher APY than they would with a traditional savings account, but earnings from money market accounts tend to be on par with that of high-yield savings accounts.

Compare offers to find the best savings account

Which account lets you earn the highest APY?

Of the three deposit accounts, CDs give savers the greatest potential to earn the highest APY for their balance as long as customers are willing to abide by the length of time for which they'd have to keep their money locked up in the account.

Generally, the longer your CD term, the higher your APY will be, which means you can potentially out-earn what you would with a high-yield savings account or money market account.

The Marcus by Goldman Sachs CD Account offers some of the longest CD maturity terms on the market with terms up to six years.

Marcus by Goldman Sachs® CDs

Marcus by Goldman Sachs® is a brand of Goldman Sachs Bank USA, a Member FDIC.
  • Annual Percentage Yield (APY)

    From 4.00% to 5.25% APY

  • Terms

    From 6 months to 6 years

  • Minimum deposit

    $500

  • Monthly fee

    None

  • Early withdrawal penalty fee

    If you withdraw the balance entire principal amount from your CD account prior to maturity, you'll be charged an early withdrawal penalty based on the term of your CD and the principal (except in the case of a No-Penalty CD). Here's how early withdrawal penalties are calculated:

  • Early Withdrawal Penalty = Interest Rate ÷ 365 (or 366) × Penalty Days × Original Principal Balance

Terms apply.

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Bottom line

CDs, money market accounts and high-yield savings accounts are all great tools for growing your savings without having to invest your money and subject it to the volatility of the stock market. But if you want to earn as much interest on your balance as possible, CDs provide the ability to do so as long as you choose a longer maturity timeline and can actually keep your money locked up for the entire term.

Why trust CNBC Select?

At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of banking products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best deposit accounts.

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Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
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