There's only one reason I'd ever use a CD over a high-yield savings account: college tuition
- A CD can sometimes offer a higher rate of return than a high-yield savings account, but in exchange you have to lock your money away for a certain period of time.
- For money I know I'll need in the next one to three years, a high-yield savings account makes sense. I'd rather invest money I'll need in five to 10 years.
- I would use a CD to save for my future kids' college tuition, since I'd know exactly when payments would be due in the next one, two, three, and four years.
- See Business Insider's picks for the best high-yield savings accounts »
A certificate of deposit, or CD for short, is a type of savings account that offers a set rate of return in exchange for a fixed date of withdrawal. Typically, you cannot access your money early without paying a fee.
CDs are similar to high-yield savings accounts, except in return for locking your money away for a certain period, you are usually rewarded with a slightly higher interest rate, especially if you choose a CD with a longer term.See the rest of the story at Business Insider
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