Key Takeaways
- Your time horizon and the purpose of your savings can help determine what type of account is best for your cash.
- If flexibility is important, a high-yield savings account is a great bet, and the top-paying accounts offer as much as 5.00% APY.
- For money you don’t need at the moment, CDs are a solid option, paying guaranteed rates of up to 4.60% APY.
- Want check-writing access? Then, a money market account might be your best choice, with top accounts offering up to 4.37% APY now.
- A mix of account types could be the best strategy for maximizing your savings.
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Cash in the Bank Is Paying Big Returns Right Now
If you’ve got spare cash, now’s a good time to put it into an account where it will earn a solid return. Interest rates are high—up to 5.00% APY—and are likely to remain stable until September, when the Federal Reserve may consider cutting the rate that influences what consumers earn on their savings.
If you’re looking for a place to put, say, a spare $10,000, there are several good options—such as certificates of deposit (CDs), high-yield savings accounts, and money market accounts. Each has benefits and drawbacks, and choosing the right account or combination of accounts will depend on your needs and financial goals.
“The first question I’d ask is, ‘What is the purpose of this money?’” said financial planner Christine D. Moriarty, CFP. For example, it’s important to know if it’s going to be for peace of mind or if it was a gift that you don’t have a plan for right now, she said.
Once you know what you intend to use the money for, then you can consider your timetable, which is key to evaluating the different account options, Moriarty said. “If you don’t do that footwork first, you’ll trip yourself up and not have a financial plan. You’ll just be reacting.”
Why a CD Might Be the Right Choice for Your $10,000
While CD rates dipped when the Federal Reserve made three cuts to its benchmark interest rate late last year, the best CDs still offer an excellent return on your money: currently up to 4.60% APY.
The main perk of a CD is that the rate is guaranteed for the duration of your term, regardless of any Fed interest rate changes. Whether your CD matures later this year or in several years, its annual percentage yield (APY) won’t change, making it easy to know what you’ll earn at the end. The drawback is that you don’t have easy access to your money during that time without paying an early withdrawal penalty, which will eat into your return.
Below you can see the top nationwide CD rates, followed by a list of the best three options in each term, including how much your $10,000 would earn by maturity.
A High-Yield Savings Account Offers Flexibility for Your $10,000
For savings accounts, the main benefit is flexibility. You can access your money anytime, and the top high-yield savings accounts offer rates similar to some of the best CDs, though sometimes you’ll have to meet other requirements, such as a minimum deposit, to earn an account’s top APY.
While current rates reach 5.00% APY, they’re tied to the main drawback of savings accounts: the potential for the rate to change. A savings account’s rate is not guaranteed, meaning that your bank or credit union can change it at any point. And in the case of a likely Fed rate change this fall, your high-yield savings account rate will almost certainly adjust accordingly.
Money Market Accounts Combine Flexibility and Check-Writing
A third option, a money market account, is a bit of a hybrid: It functions much like a savings account and can offer similar rates and flexibility, and it also provides check writing.
Money market accounts are sometimes advertised as paying more than savings accounts, but because there’s stiff competition among high-yield savings accounts, money market accounts don’t always pay more. The best money market accounts currently pay up to 4.37% APY.
One thing to note is that money market accounts offered by credit unions and banks are different from the money market funds or money market mutual funds offered by brokerages. The money market accounts offered by banks are generally federally insured and involve little risk compared to the investment-type accounts, whose value can fluctuate.
Why a Hybrid Strategy Might Be the Best Option for Some Savers
For some, a combination of more than one of these account types might be the best option. That enables you to benefit from the strengths each account has to offer. One example where this might work well, Moriarty said, is if you want to earmark some of your cash for emergencies and some for another purpose. In that case, perhaps half of it goes into a savings account so it’s easily accessible and the rest could go into a 6-month CD, she said.
Daily Rankings of the Best CDs and Savings Accounts
We update these rankings every business day to give you the best deposit rates available:
Important
Note that the “top rates” quoted here are the highest nationally available rates Investopedia has identified in its daily rate research on hundreds of banks and credit unions. This is much different than the national average, which includes all banks offering a CD with that term, including many large banks that pay a pittance in interest. Thus, the national averages are always quite low, while the top rates you can unearth by shopping around are often 5, 10, or even 15 times higher.
How We Find the Best Savings and CD Rates
Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs and savings accounts to customers nationwide and determines daily rankings of the top-paying accounts. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), and the account’s minimum initial deposit must not exceed $25,000. It also cannot specify a maximum deposit amount that’s below $5,000.
Banks must be available in at least 40 states to qualify as nationally available. And while some credit unions require you to donate to a specific charity or association to become a member if you don’t meet other eligibility criteria (e.g., you don’t live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, read our full methodology.