For me, certificates of deposit (CD) are one of the most underrated savings products out there.

Put simply, a CD lets you deposit your money for a set period, then earn a guaranteed APY in return. And with so much economic uncertainty, now could be the perfect time to lock in a high CD rate while you still can.

Want to see how they work? Here’s how much you can earn with $20,000 in a 6-month CD today.

What to know before you open a CD

Opening the first CD you find could mean missing out on a lot of savings. Before you get started, you’ll want to:

  • Decide on a term length: Longer-term CDs (a year or more) mean more security, while shorter-term CDs (3-12 months) give you quicker access to your cash. Six months is a common example that’s a bit on the shorter side.
  • Shop around before you open: This is the big one. Don’t just open a CD from, say, Chase or Wells Fargo just because you save there. Online banks usually offer much higher APYs, which can mean a difference of hundreds of dollars.
  • Make a savings plan. Don’t lock up money you might need — if you withdraw from a CD early, you could get hit with a penalty that erases your earnings. Try to be disciplined.

Like any other financial product, some CDs are better than others. Picking the right one can make a big difference.

How much can you earn on $20,000?

$20,000 isn’t chump change — and it can easily earn you hundreds of dollars if you pick the right CD. Here’s how much you can earn at different rates over a six-month period:

  • At 1.47% APY (national average): $146
  • At 3.50% APY: $347
  • At 3.75% APY: $372

As you can see, that’s a difference of a couple hundred dollars over six months just for opening the right account. And if you pick a longer CD, the difference grows even more.

Ready to start earning today? Check out our full list of the best CDs available now to get started.

High-yield savings: A more flexible option

CD rates are pretty strong right now, with some of the best ones topping 4.00% APY. If you want a way to earn more on your cash and keep access to it, though, there’s another way to save: A high-yield savings account (HYSA),

Right now, top HYSAs are also offering APYs of 4.00% or higher, with the difference being that, just like a normal savings account, you can access your cash anytime.

The downside is that the APY on your HYSA is variable and can fluctuate at the bank’s discretion — you’re not “locking in” a rate like you are with a CD. Still, the tradeoff in flexibility could be very much worth it. I recommend an HYSA as the perfect place to keep your short-term savings.

Here’s how much you can earn with $20,000 parked in an HYSA over six months:

  • At 0.39% APY (national average savings rate): $39
  • At 3.50% APY: $347
  • At 4.00% APY: $396

As you can see, the numbers are quite similar. Which option is best for you really depends on your current needs.

Ready to earn more and keep total access to your cash? Check out our full list of the best high-yield savings accounts today.

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