3 Ways to Boost Your Savings Right Now by Opening a CD

If you're looking for a safe way to grow your savings, certificates of deposit (CDs) are one of the best options. They're offering excellent interest rates -- many of our top CD picks currently have rates of over 5%. When you open a CD, you also get to lock in your rate for the entire term.

Those rates may not last much longer, though. They're expected to decline in as little as one month, so if you want to open a CD, it's a good idea to get yours ASAP. Keep reading to learn a few ways you could use CDs to maximize your savings.

1. Put money you'll need soon in a short-term CD

Many people think that opening a CD means locking away your money for years. But there are a wide variety of CD terms available, with most ranging from three months to five years. And shorter CDs are offering some of the highest rates right now.

Even if you can't commit your savings for too long, you could still get a great interest rate on it with a CD. Here are a few examples of how you could make the most of your money with short-term CDs:

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of January 9, 2025. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of January 9, 2025. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.40% Rate info The annual percentage yield (APY) is accurate as of Jan. 2, 2025, and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

• Have some money set aside for gift shopping and other expenses over the holidays? Put it in a 3-month CD.
• Planning to buy a car early next year? Use a 6-month CD to earn more interest on that savings.
• Is your child starting college in 2025? A 12-month CD is a safe and fairly high-paying option for college savings.

2. Get more flexibility with a no-penalty CD

One of the main worries people have about CDs is that they'll need their money before the maturity date. Most CDs charge an early withdrawal penalty. The penalty amount depends on the bank and the CD length. On longer CDs, it's often several months of the interest you've earned.

If you want to avoid this, one option is to keep your money in a high-yield savings account. But you could also open a no-penalty CD. You get a fixed interest rate, just like you would with a regular CD, and you won't incur a penalty if you need to withdraw your money before the end of the term.

Rates tend to be a little lower on no-penalty CDs. That's the tradeoff for the flexibility they offer. But there are no-penalty CDs with rates over 4% and 5%.

3. Set up a CD ladder

Maybe you don't want to lock up all your money in a single CD and wait for it to mature. A popular alternative is CD laddering, a strategy that involves opening multiple CDs with different maturity dates.

Let's say you have $25,000 that you want to put in CDs. You could put it all in a 5-year CD, if you don't mind setting it aside for that long. Or you could divide it up into a CD ladder. For example, you could put:

• $5,000 in a 1-year CD
• $5,000 in a 2-year CD
• $5,000 in a 3-year CD
• $5,000 in a 4-year CD
• $5,000 in a 5-year CD

CD laddering is a popular strategy for retirees who want to set up consistent income streams. But it can work for adults of any age who want the benefits of CDs with regular access to their money.

It's easy to make money with CDs, especially with how much they're paying right now. If you've been considering them, but you're not sure of the best way to use them, give one of those CD strategies a try.