Why I'm Not Opening Any CDs in 2025 -- Even With Rates Over 4%

Right now, there are 1-year certificates of deposit (CDs) that pay rates of 4.00% or more. If you open a short-term CD like a 3-month or a 6-month CD, you can get an annual percentage yield (APY) of about 4.60%.

Why would anybody turn down a guaranteed return of over 4% per year? For me, there are two big reasons why I don't bother with CDs -- and you probably shouldn't, either.

My long-term savings are invested in stocks through my 401(k)

For the past 12 years, I've been putting as much money as I can into my 401(k). That money is mostly invested in big U.S. companies, with smaller amounts going into real estate and international stocks.

Over the past four years -- the farthest I can look back in my 401(k)'s history -- my retirement savings have earned an average of 8.8% per year. That's about twice the amount I could earn from today's best CDs. I'm currently on track to retire with more income than I earn now -- or to retire early if I want to.

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.

These kinds of returns aren't possible with CDs, and most Americans need high returns to save enough for a comfortable retirement. If you don't invest aggressively now, you may have to make big sacrifices when you retire.

If you have a 401(k), then it's probably the best place for your disposable income. Make sure you get the full employer match (if offered) and choose investments that will earn enough to achieve your goals. And, to repeat the best advice my dad ever gave me, "save until it hurts."

No 401(k)? Here's the next best thing

Not everyone has access to a 401(k) or similar retirement plan. Fortunately, you can invest up to $7,000 a year ($8,000 if you're 50 or older) in an IRA. You won't get an employer match, but you'll enjoy the same tax breaks that a 401(k) offers.

If you max out your IRA, then the rest of your retirement savings can go into a regular brokerage account. You'll pay more in taxes on those investments, but it's a small price compared to the returns you can achieve.

Don't know what to invest in? You could start with an S&P 500 index fund and invest in 500 of America's biggest companies all at once. The S&P 500 has earned an average of 10% per year since 1957. At that rate, someone who earned the median income of $80,000 per year and invested 15% of every paycheck would have over $1 million in 25 years.

If you want to get in on the stock market's returns, then check out our list of the best brokerage accounts and start investing today.

My short-term savings go into a high-yield savings account

Like CDs, the best high-yield savings accounts currently offer an APY of around 4.00% or more.

On top of the high APY, savings accounts offer benefits that CDs don't:

• You can withdraw money at any time (most CDs charge a penalty if you cash them out before the term ends).
• You can easily (or even automatically) make deposits whenever you want.
• You can easily transfer money to other accounts, like a checking account or brokerage account.

Savings accounts are simpler, more flexible, and more convenient than CDs. This is why I keep my emergency fund in a high-yield savings account, as well as some money I'm saving for short-term goals.

Want to earn a return of 4% or more on your savings? Click here to check out our list of the best high-yield savings accounts and start saving smarter today.

There's no room for CDs in my financial plan

My savings account only contains as much money as I need to cover an emergency or to pay for a large purchase I'm making soon. The rest of my savings are invested in stocks so I'll be able to retire in style some day.

I might be able to squeeze out a little more interest if I moved some money out of savings and into CDs. Maybe I'd earn an extra $10 or $20 per year. But for that amount, I'd rather skip the hassle and just keep making automatic deposits to my savings account.