Skip to main content
png

FDIC-Insured—Backed by the full faith and credit of the U.S. Government

Close

Before you go

You are leaving Flagstar.com

Continue
Budgeting and Saving

CD vs. high-yield savings: Choose the right account for your goals

Ever feel like growing your savings is taking forever? If you’re ready to upgrade from a traditional savings account to one that can help accelerate your savings efforts, you’ve come to the right place. Let's take a closer look at two popular savings options, high-yield savings accounts and CDs. Both accounts offer competitive interest rates and are reliable, low-risk investments.

 

With both accounts offering similar benefits, it can be tricky to choose between them. We'll cover the differences between high-yield savings accounts and CDs to help you decide what account will best support your goals and match your financial lifestyle.

 
What is a CD account?

A certificate of deposit (CD) is a type of savings account that offers a competitive interest rate in exchange for leaving your money untouched for a predetermined period. Your initial deposit, known as the principal, will accrue interest throughout the term of your CD.

 

A CD could be a great option to grow your money if you don’t need to withdraw before the end of the term, usually between six months and a few years. You’ll also want to have your full deposit ready upfront. With a CD account, additional deposits are not usually accepted after the initial one.

 

What is a high-yield savings account?

A high-yield savings account has the same functionality as a traditional savings account but with the added perk of having a higher interest rate, also referred to as an annual percentage yield (APY). The higher your APY, the more you will see your savings grow. Keep in mind that the APY can change at any time based on the Federal Reserve benchmark interest rate.

 
What are the main differences between them? Let’s break it down:

Withdrawals

  • With most CDs, your savings are locked in for the length of the term. If you need to withdraw funds, penalties may apply.
  • With a high-yield savings account, you can make withdrawals without penalties. You can also continue making deposits, unlike with most CD accounts.

Interest Rates

  • CDs typically offer higher rates than savings accounts. Your rate is fixed for the length of the CD term.
  • High-yield savings accounts also offer better rates than standard savings accounts. Your rate is variable and could change at any time.

How do I know which account is right for me?

It all comes down to choosing what works for your lifestyle. If you plan to continue making deposits or withdrawals with your savings, a high-yield savings account could be a great option to give you plenty of flexibility with your money. CDs are a great option if you already have a chunk of money saved that you won’t need to touch for a while.

 

If you’re still not sure which account is best for you, compare available interest rates for CD and high-yield savings accounts to find the best offer. Remember, high-yield savings rates can change anytime, but your CD rate is locked in for the length of the term.

 

Try out our savings calculators and CD calculator to see how much your money can grow depending on the interest rate.

Get started

Parent and child building a snowman
Earn 4.20% APY1 with Flagstar Performance Savings

Grow your money with a great savings rate.
Person in a city smiling and looking at her phone with fireworks in the background
Earn up to 4.15% APY2 with a CD

Explore our wide range of CD account terms that can help you earn more interest.
Finger clicking to apply

Easy to open online. Easy to set up.

You can open an account anytime, day or night. It’s simple, secure, and takes just minutes.

step 1 icon

Verify your identity.

We'll perform a quick security check to protect your information. You need to be at least 18 and provide your Social Security number.

step 1 icon

Tell us about yourself.

Here’s where you enter your info, like name and address, any joint owners, and identification (e.g., driver’s license, state ID, or passport).

step 1 icon

Make a deposit.

Add money with an online transfer (have the routing and account numbers for an existing account ready) or at a branch.

Open an account
Person and location symbol

Rather open an account in person? Find your nearest branch.

You may also be interested in:

Image of people sitting on the edge of a pool.
What is a certificate of deposit (CD) account?

Offering higher interest rates, CD accounts can help grow your savings faster than most traditional savings accounts.
Yellow image
CD Calculator

Discover how much your savings could grow in a certificate of deposit (CD) account with our CD interest calculator.
Person on tablet with bank card
Checking Accounts

Explore our personal checking account options to find the right fit for you. 

Flagstar Performance Savings

1Annual Percentage Yield (APY) is accurate as of 1/17/2025. Tier 1 $0 – $9,999.99 features an annual percentage yield of 0.10%. Tier 2 $10,000.00 – $24,999.99 features an annual percentage yield of 0.10%. Tier 3 $25,000.00 – $49,999.99 features an annual percentage yield of 4.20%. Tier 4 $50,000.00 – $99,999.99 features an annual percentage yield of 4.20%. Tier 5 $100,000.00 – $499,999.99 features an annual percentage yield of 4.20%. Tier 6 $500,000.00+ features an annual percentage yield of 4.20%. The interest rate(s) and annual percentage yield(s) are variable and may change at any time before or after the account is opened. Initial minimum opening deposit to earn the higher interest rate on the Flagstar Performance Savings account is $25,000 and must be “new money,” which is defined as money that is not currently on deposit in any Flagstar Bank account (except maturing CDs). Additionally, (i) account must be funded within 90 days of the approval date, and (ii) early account closure fee may be imposed for accounts closed within 180 days. A maintenance service charge of $15 will be imposed every statement cycle if the average daily collected balance in the account is less than $10,000. The maintenance service charge will be waived if you are the tax reported owner on this account and you are an owner on a Flagstar personal checking account. Fees may reduce earnings. Personal accounts only. Limited time offer. Area restrictions may apply. If you are a Private Bank client, please contact your Private Client Group to enroll.

2Annual Percentage Yield (APY). 4.10% APY is accurate as of 1/17/2025 and available as a 13-month term. 4.15% APY is accurate as of 1/17/2025 and available as a 7-month term. 4.00% APY is accurate as of 1/17/2025 and available as a 24-month term. Fees could reduce earnings. Withdrawals may result in imposition of applicable early withdrawal penalties. $500 minimum opening deposit required. Maximum deposit is $10 million. 'New Money' is defined as funds that are not currently deposited in any account at Flagstar Bank. Not available for public units or Business CDs. Certain restrictions, including area restrictions, may apply. Offer subject to change or cancellation at any time without notice. Must present offer at account opening. Limited-time offer. Important information will be provided to you in the disclosures you receive during the account opening process. Please contact your local branch for more information.