$20K in a High-Yield Savings vs $20K in a One-Year CD - Which Pays More?

If you have $20,000 to invest, you have many options. However, those who prefer relatively safe and steady growth typically opt for either a high-yield savings account or a one-year certificate of deposit (CD).

Both banking products offer a return on your money without exposing you to market volatility. So which one is right for you? The answer may vary depending on your situation and preferences. That's why it's vital to be informed about both options.

The following sections will discuss everything you need to know to make a more informed financial decision.

What is a high-yield savings account?

A high-yield savings account (HYSA) is exactly what it sounds like. It's a savings account that has interest rates higher than the national average. In fact, these rates can be 10–20 times higher than the traditional route.

Online banks offer the majority of HYSAs. This is because they're able to save money by not operating brick-and-mortar locations. There may be certain requirements for signing up, but this will vary by financial institution.

What is a one-year CD?

A certificate of deposit is a type of bank account that accrues interest. However, your return is based on your money being locked in for a specified amount of time. By agreeing not to pull your money out, you'll typically secure a higher interest rate than with savings accounts.

A one-year CD you keep until maturity will lock your money in for a full year. After that point, you can withdraw your money or roll it into another certificate of deposit. While you can withdraw your money before the CD matures, you'll likely pay a penalty.

What's the average APY of high-yield savings accounts?

The national average annual percentage yield (APY) for traditional savings accounts is 0.38% APY (as of July 21, 2025), making them unappealing for most. However, the majority of HYSAs offered by online banks in 2025 are above 4.00% APY. If you deposit $20,000 in one of these accounts, you could easily earn $800 or more in interest over a one-year period.

What's the average APY of one-year CDs?

As of July 2025, the average APY for a one-year CD was 1.63%. However, similar to HYSAs, some banks offer much higher rates. Again, higher rates are typically offered by online banks. Since some of these rates are above 4.00% APY, you could earn over $800 during a one-year period with these accounts as well.

Does a HYSA or a one-year CD make more money?

How much money you can make is dependent on the APY, your initial deposit, any account fees, and whether interest accumulates on a daily or monthly basis.

It's also important to know the terms of each account. For example, a HYSA may require a minimum balance to earn a certain APY. If you withdrew funds, not only is your balance lower (thus earning less interest), but it could push you into a lower APY tier.

Additionally, APYs for high-yield savings accounts are typically variable, so there is no guarantee the rate you have when you open your account will be the same in one year.

Would high-interest options earn the same amount?

As of July 2025, some of the best high-yield savings accounts offered rates of 4.00% APY or higher. Some of the best certificates of deposit offered 4.50% APY. At these rates, $20,000 in a HYSA could earn $888 in one year. In comparison, a one-year CD would provide a profit of $900. Put simply, earned interest would be nearly identical. So, how do you choose what's right for you?

Pros and cons of HYSAs

When it comes to high-yield savings accounts, there are many benefits. Most importantly, you typically can access your funds at any time without penalty. This might be important to you if you don't have an emergency fund or if an unexpected bill comes up. Even better, you can deposit your money for as long or as short a time as you want.

However, high-yield savings accounts can have rate fluctuations. If you choose a 4.20% APY HYSA over a 4.20% APY CD because of the benefits offered, your rate could suddenly drop to 4.00% or even lower. Also, there may be certain fees associated with the account.

Pros and cons of one-year CDs

One-year CDs also have an abundance of benefits. Most importantly, your interest rate is usually fixed for the full term. Even if market rates drop, nothing will change with your account. There are also typically no monthly fees related to the account.

Unfortunately, these benefits come at the risk of your money being inaccessible when you might need it. While you can withdraw it early, you'll most likely face a penalty. A one-year certificate of deposit could also miss out on additional profit if interest rates rise. With $20,000 in your account, this small difference could add up.

Bottom line

Both high-yield savings accounts and one-year CDs offer low-risk ways to grow your money. However, they do serve different purposes. Your decision will be based on whether you want flexibility, ongoing access to funds, or higher rates.

One thing to keep in mind is that some online banks offer a no-penalty CD. This hybrid option allows you to withdraw early without a fee, but you may lose certain benefits by going this route. Whatever your strategy, making an informed decision is paramount to your financial well-being.