3 Reasons Not to Open a CD Right Now -- Even With Rates Over 4%

Right now, the best CD rates you can get are in the neighborhood of 4.50%. That's a pretty high return for an investment with virtually zero risk. And yet, most people have better options.

The problem with certificates of deposit is that they're sort of an unhappy medium between high-yield savings accounts and higher-return investments like stocks. Unless you have a very large amount of money to set aside, then you may not want to bother with CDs.

Here are three reasons to put your money elsewhere.

1. High-yield savings accounts are more convenient and flexible

The best high-yield savings accounts currently offer APYs of about 3.75% to 4.50%. That means they pay roughly the same interest rates as the best CDs.

Our Picks for the Best High-Yield Savings Accounts of 2025

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.70% Rate info 3.70% annual percentage yield as of April 15, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.70% Rate info 3.70% annual percentage yield as of April 15, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
CIT Platinum Savings Member FDIC. APY 4.10% APY for balances of $5,000 or more Rate info 4.10% APY for balances of $5,000 or more; otherwise, 0.25% APY Min. to earn $100 to open account, $5,000+ for max APY Open Account for CIT Platinum Savings On CIT's Secure Website. Member FDIC.	4.10% APY for balances of $5,000 or more Rate info 4.10% APY for balances of $5,000 or more; otherwise, 0.25% APY	$100 to open account, $5,000+ for max APY	Open Account for CIT Platinum Savings On CIT's Secure Website.
Barclays Tiered Savings Member FDIC. APY 4.15% Rate info Balances less than $250,000 earn 4.15%, and balances greater than $250,000 earn 4.40% APY. Min. to earn $0 Open Account for Barclays Tiered Savings On Barclays' Secure Website. Member FDIC.	4.15% Rate info Balances less than $250,000 earn 4.15%, and balances greater than $250,000 earn 4.40% APY.	$0	Open Account for Barclays Tiered Savings On Barclays' Secure Website.

In addition, savings accounts…

• Are easy to open
• Allow easy (or even automatic) deposits at any time
• Allow easy withdrawals and transfers to other accounts

These features make savings accounts perfect for building your emergency fund and other short-term savings. You can add to them whenever you want -- and tap them whenever you need.

Meanwhile, most CDs charge an interest penalty if you cash them out before their maturity date (there are exceptions, but they generally have lower APYs). And once you've opened a CD, you can't add more money to it.

This lack of flexibility can be a positive if you want to avoid the temptation of spending your deposits. Otherwise, CDs are just more hassle, and they offer little to no additional interest in exchange.

Want to earn 10 times the national average APY? Check out our list of the best high-yield savings accounts and open a new account today.

2. The stock market offers much higher returns

Since 1957, the stock market has returned an average of 10% per year (as measured by the S&P 500 Index, which represents most of the U.S. market by value). That's more than twice the interest rate on today's best CDs.

The stock market fluctuates, and short-term losses are guaranteed. But the S&P 500 Index has gone up in 38 of the past 50 years. This is why the stock market is one of the best places to invest for big, long-term goals like retirement.

If you're unsure where to start, consider opening an IRA and purchasing an S&P 500 index fund. These funds have low fees and allow you to invest in the entire S&P 500 Index all at once. That means you get a piece of 500 big, successful U.S. companies -- no need to pick stocks on your own.

3. You have credit card debt

If you're carrying any credit card debt, or other high-interest debt, then you'll be swimming upstream until it's paid off. The average credit card APR is 21%, according to the Federal Reserve. So if you have outstanding credit card debt, you're essentially earning a double-digit negative return on your balance.

If your credit card balance is greater than $0 at the end of your billing cycle, then investing in CDs is a waste of money. No CD will earn you more than the interest you're paying to your credit card issuer -- nor will the stock market.

CDs still make sense for some

In some situations, investing in CDs can be a good call.

For instance, if you…

• Have enough money in a savings account to cover any expenses that might crop up within the next few years
• Have no high-interest debt
• Are on track to save more than enough for a comfortable retirement

…then you might set some money aside in CDs so it can earn a respectable, guaranteed APY.

But most people will want to put near-term savings in a high-yield savings account, then invest the rest more aggressively through a 401(k), IRA, or regular brokerage account.