Forget CDs, Even With Rates up to 4.50%. Here’s Where to Put Your Money Instead

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A lot of people think certificates of deposit (CDs) are one of the best places to park your cash — especially since their interest rates spiked last year. CD rates have been declining for months now, but you can still find short-term CDs paying up to 4.50%. For a guaranteed return, that’s hard to beat.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. Still, there are probably better places for your money. You can get similar returns without locking up your cash — or higher returns if you take a little risk.The problem with CDsAt first glance, CDs seem great: You get a guaranteed return, there’s no risk of losses, and your money is FDIC insured.However, CDs are sort of an unhappy medium between high-yield savings accounts and high-growth investments like stocks. For me, there just isn’t a place for CDs in my financial plan.Here’s why.High-yield savings accounts: More flexibility and a similar APYA high-yield savings account (HYSA) is a great alternative to a CD. Right now, you can find HYSAs with annual percentage yields (APYs) of about 4.00% or more. There are even some HYSAs that pay 4.50% if you can meet certain requirements, like a minimum balance or direct deposit amount.So you can get about the same interest rate that’s offered by the best CDs, and you get the flexibility and convenience of a savings account:You can deposit and withdraw money whenever you want.You can quickly transfer money to other accounts.You can simply deposit cash and leave it, whereas CDs require some work and decision-making when they mature.Savings accounts make it easy to save money consistently. And the ease of withdrawing money quickly makes them perfect for your emergency fund.The only advantage of CDs is that their interest rates are fixed, while savings account APYs can change at any time. However, given how similar their rates are right now, you’re not likely to gain much by locking your money up in a CD.Ready to start earning 10 times the national average rate on your savings? Check out our list of the best high-yield savings accounts and open an account today.The stock market: More risk, but more rewardInvesting in stocks is a much better way to grow your wealth over time. And most Americans need a high return on investment to save enough for retirement.Historically, the stock market has returned about 10% per year on average, as measured by the S&P 500 Index. Yes, stocks lose value sometimes, but if you buy and hold them for decades, then you stand a good chance of making much higher returns than you could through a CD.Here’s a quick comparison of how much $10,000 could grow over time.YearsCD With a 4.50% APYStock Market Portfolio Earning 7% per Year5$12,462$14,02610$15,530$19,67220$24,117$38,69730$37,453$76,123Data source: Author’s calculations.The longer you stay invested, the more you benefit from the stock market’s higher growth.Of course, we don’t know how the stock market will perform. We don’t know what future CD rates will be, either. But if history is any guide, the stock market is a much better long-term bet than CDs.Ready to get in on the stock market’s growth? Check out our list of the best stock brokers and open a new account to start investing today.There’s no room for CDs in my financial planI keep my emergency savings in a savings account so I can tap them whenever I need to. The rest of my income is invested in high-growth assets (mostly stocks) so I’ll someday have plenty of money to retire on. As a result, I’m on track to retire with more annual income than I earn now — or perhaps to retire early.CDs offer less flexibility than savings accounts and lower returns than stocks. I don’t need an account that might pay a tiny bit more interest if I keep my cash locked up for months or years. After all, I keep as little money in cash as possible, because I’m investing for growth — and you may want to do the same.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

A lot of people think certificates of deposit (CDs) are one of the best places to park your cash — especially since their interest rates spiked last year. CD rates have been declining for months now, but you can still find short-term CDs paying up to 4.50%. For a guaranteed return, that’s hard to beat.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

Still, there are probably better places for your money. You can get similar returns without locking up your cash — or higher returns if you take a little risk.

The problem with CDs

At first glance, CDs seem great: You get a guaranteed return, there’s no risk of losses, and your money is FDIC insured.

However, CDs are sort of an unhappy medium between high-yield savings accounts and high-growth investments like stocks. For me, there just isn’t a place for CDs in my financial plan.

Here’s why.

High-yield savings accounts: More flexibility and a similar APY

A high-yield savings account (HYSA) is a great alternative to a CD. Right now, you can find HYSAs with annual percentage yields (APYs) of about 4.00% or more. There are even some HYSAs that pay 4.50% if you can meet certain requirements, like a minimum balance or direct deposit amount.

So you can get about the same interest rate that’s offered by the best CDs, and you get the flexibility and convenience of a savings account:

• You can deposit and withdraw money whenever you want.
• You can quickly transfer money to other accounts.
• You can simply deposit cash and leave it, whereas CDs require some work and decision-making when they mature.

Savings accounts make it easy to save money consistently. And the ease of withdrawing money quickly makes them perfect for your emergency fund.

The only advantage of CDs is that their interest rates are fixed, while savings account APYs can change at any time. However, given how similar their rates are right now, you’re not likely to gain much by locking your money up in a CD.

Ready to start earning 10 times the national average rate on your savings? Check out our list of the best high-yield savings accounts and open an account today.

The stock market: More risk, but more reward

Investing in stocks is a much better way to grow your wealth over time. And most Americans need a high return on investment to save enough for retirement.

Historically, the stock market has returned about 10% per year on average, as measured by the S&P 500 Index. Yes, stocks lose value sometimes, but if you buy and hold them for decades, then you stand a good chance of making much higher returns than you could through a CD.

Here’s a quick comparison of how much $10,000 could grow over time.

The longer you stay invested, the more you benefit from the stock market’s higher growth.

Of course, we don’t know how the stock market will perform. We don’t know what future CD rates will be, either. But if history is any guide, the stock market is a much better long-term bet than CDs.

Ready to get in on the stock market’s growth? Check out our list of the best stock brokers and open a new account to start investing today.

There’s no room for CDs in my financial plan

I keep my emergency savings in a savings account so I can tap them whenever I need to. The rest of my income is invested in high-growth assets (mostly stocks) so I’ll someday have plenty of money to retire on. As a result, I’m on track to retire with more annual income than I earn now — or perhaps to retire early.

CDs offer less flexibility than savings accounts and lower returns than stocks. I don’t need an account that might pay a tiny bit more interest if I keep my cash locked up for months or years. After all, I keep as little money in cash as possible, because I’m investing for growth — and you may want to do the same.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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