CD vs High-Yield Savings: Which Earns More in 2026?

How the CD vs high-yield savings comparison is worked out

On the defaults — $10,000.00, a 4.50% CD, a savings account starting at 4.00% and dropping to 3.50% halfway through, 12 months, 22% tax — the CD ending value is $10,459.40 (interest $459.40, effective annual return 4.5940%), the savings account ending value is $10,381.51 (interest $381.51, blended return 3.8151%), the winner is the CD by $77.89, and after tax the CD interest is $358.33 and the savings interest is $297.58. The whole calculation is four moves: compound the CD monthly at its locked APY, compound the savings account in two halves at its two rates, subtract the deposit for the interest, and take the higher ending value as the winner.

Five things about the model are worth stating plainly. First, the CD’s APY is locked for the whole term and the interest compounds monthly — the ending value is the deposit times (1 + CD APY ÷ 12) to the power of the months. Second, the savings account starts at the starting APY and the rate changes halfway through the term: the first half of the term, rounded up, at the starting rate, and the rest at the new rate — so a 1-month term is entirely at the starting rate, and a 12-month term splits 6 and 6. Third, CD rates are quoted as APY, and the calculator compounds monthly at APY ÷ 12, so the effective annual return on the CD is slightly above the APY: 4.50% APY → 4.5940% effective. Fourth, the interest on both sides is taxed at your rate — and tax does not change the winner here, because it shrinks both sides by the same factor. And fifth, the winner is the higher ending value, before tax — after tax the gap shrinks but the order stays.

The worked example, line by line

Setup: $10,000.00, CD 4.50% APY, savings account 4.00% then 3.50%, 12 months, 22% tax.

Line 1 — compound the CD. The monthly rate is 4.50% ÷ 12 = 0.3750%, so the ending value is $10,000.00 × 1.00375^12 = $10,459.40, and the interest is $459.40.

Line 2 — compound the savings account in two halves. The first 6 months earn at 4.00% ÷ 12 = 0.3333% a month and the last 6 at 3.50% ÷ 12 = 0.2917% a month, so the ending value is $10,000.00 × 1.003333^6 × 1.002917^6 = $10,381.51, and the interest is $381.51.

Line 3 — take the winner and the gap. $10,459.40 against $10,381.51 is a gap of $77.89 — the CD wins.

Line 4 — tax the interest. After 22% tax the CD interest is $459.40 × 78% = $358.33 and the savings interest is $381.51 × 78% = $297.58. Rounding convention: totals are computed from unrounded values, so rounded parts may differ by a cent from their rounded sum.

Every branch, checked

CD APY 5.00%: Deposit $10,000.00, CD 5.00% APY, HYSA 4.00% then 3.50%, 12 months, tax 22.00%: CD $10,511.62 (interest $511.62), HYSA $10,381.51 (interest $381.51), CD wins by $130.11, after-tax interest CD $399.06, HYSA $297.58 — half a point more on the CD stretches the lead from $77.89 to $130.11.

HYSA rate never changes: Deposit $10,000.00, CD 4.50% APY, HYSA 4.00% then 4.00%, 12 months, tax 22.00%: CD $10,459.40 (interest $459.40), HYSA $10,407.42 (interest $407.42), CD wins by $51.98, after-tax interest CD $358.33, HYSA $317.78 — if the savings rate stays at 4.00% all year, the CD’s lead shrinks to $51.98 — the rate cut is worth $25.91 to the CD.

HYSA rate drops to 3.00%: Deposit $10,000.00, CD 4.50% APY, HYSA 4.00% then 3.00%, 12 months, tax 22.00%: CD $10,459.40 (interest $459.40), HYSA $10,355.66 (interest $355.66), CD wins by $103.74, after-tax interest CD $358.33, HYSA $277.41 — a deeper cut to 3.00% pushes the CD’s lead to $103.74.

Term 24 months: Deposit $10,000.00, CD 4.50% APY, HYSA 4.00% then 3.50%, 24 months, tax 22.00%: CD $10,939.90 (interest $939.90), HYSA $10,777.58 (interest $777.58), CD wins by $162.33, after-tax interest CD $733.12, HYSA $606.51 — over two years the CD’s lead grows to $162.33, because the locked rate compounds for twice as long.

Deposit $25,000: Deposit $25,000.00, CD 4.50% APY, HYSA 4.00% then 3.50%, 12 months, tax 22.00%: CD $26,148.50 (interest $1,148.50), HYSA $25,953.78 (interest $953.78), CD wins by $194.72, after-tax interest CD $895.83, HYSA $743.94 — two and a half times the deposit, two and a half times the gap: $194.72.

CD APY 3.00%: Deposit $10,000.00, CD 3.00% APY, HYSA 4.00% then 3.50%, 12 months, tax 22.00%: CD $10,304.16 (interest $304.16), HYSA $10,381.51 (interest $381.51), HYSA wins by $77.35, after-tax interest CD $237.24, HYSA $297.58 — the only branch where the savings account wins — at a 3.00% CD the savings account takes it by $77.35. The flip point is a 3.75% CD.

Tax rate 0%: Deposit $10,000.00, CD 4.50% APY, HYSA 4.00% then 3.50%, 12 months, tax 0.00%: CD $10,459.40 (interest $459.40), HYSA $10,381.51 (interest $381.51), CD wins by $77.89, after-tax interest CD $459.40, HYSA $381.51 — in an IRA, say, the interest is untaxed and the winner is unchanged: the CD still wins by $77.89, because tax shrinks both sides by the same factor.

The reverses, worked backwards

CD APY for a tie: 3.75% — the exact CD APY is 3.7500%. At the displayed 3.75% the CD ending value is $10,381.51, an exact tie with the HYSA ending value. 3.74% gives $10,380.48. The star is a PERCENT.

HYSA new APY for a tie: 5.00% — the exact new APY is 5.0002%. At the displayed 5.00% the HYSA ending value is $10,459.39, 1¢ under the CD’s $10,459.40 — rounding. 5.01% gives $10,459.91. The star is a PERCENT.

Deposit for $500.00 of CD interest: $10,883.80 — the exact deposit is 10883.8029. At $10,883.80 the CD interest is $500.00 (exact to the cent). The star is DOLLARS.

Term for the CD to reach $11,000: 26 months — the smallest whole number of months that clears $11,000. At 26 months the CD ending value is $11,022.10; 25 months gives $10,980.93. This is a step reverse: terms come in whole months, so there is no exact in-between. The star is MONTHS.

HYSA flat APY for a tie: 4.50% — the exact flat APY is 4.5000%. At the displayed 4.50% the HYSA ending value is $10,459.40, an exact tie with the CD. The star is a PERCENT.

Deposit for a $500.00 gap: $64,194.73 — the exact deposit is 64194.7317. At $64,194.73 the gap is $500.00 (exact to the cent). The star is DOLLARS.

What the defaults assume

The defaults are a $10,000.00 deposit, a 4.50% CD, a savings account at 4.00% then 3.50%, 12 months, 22% tax — CD $10,459.40, HYSA $10,381.51, CD wins by $77.89. With a $0 deposit, Deposit $0.00, CD 4.50% APY, HYSA 4.00% then 3.50%, 12 months, tax 22.00%: CD $0.00 (interest $0.00), HYSA $0.00 (interest $0.00), Tie, after-tax interest CD $0.00, HYSA $0.00 — there is nothing to earn interest on. With a 1-month term, Deposit $10,000.00, CD 4.50% APY, HYSA 4.00% then 3.50%, 1 months, tax 22.00%: CD $10,037.50 (interest $37.50), HYSA $10,033.33 (interest $33.33), CD wins by $4.17, after-tax interest CD $29.25, HYSA $26.00 — the single month is before the rate change, so the savings account earns at 4.00%. With a 0% CD APY, Deposit $10,000.00, CD 0.00% APY, HYSA 4.00% then 3.50%, 12 months, tax 22.00%: CD $10,000.00 (interest $0.00), HYSA $10,381.51 (interest $381.51), HYSA wins by $381.51, after-tax interest CD $0.00, HYSA $297.58 — the CD earns nothing and the savings account wins by $381.51. With HYSA APYs of 0% and 0%, Deposit $10,000.00, CD 4.50% APY, HYSA 0.00% then 0.00%, 12 months, tax 22.00%: CD $10,459.40 (interest $459.40), HYSA $10,000.00 (interest $0.00), CD wins by $459.40, after-tax interest CD $358.33, HYSA $0.00 — the savings account earns nothing. With a 60-month term, Deposit $10,000.00, CD 4.50% APY, HYSA 4.00% then 3.50%, 60 months, tax 22.00%: CD $12,517.96 (interest $2,517.96), HYSA $12,058.76 (interest $2,058.76), CD wins by $459.20, after-tax interest CD $1,964.01, HYSA $1,605.83 — five years of the locked rate against a rate that drops halfway through. With a $1,000,000 deposit, Deposit $1,000,000.00, CD 4.50% APY, HYSA 4.00% then 3.50%, 12 months, tax 22.00%: CD $1,045,939.83 (interest $45,939.83), HYSA $1,038,151.02 (interest $38,151.02), CD wins by $7,788.80, after-tax interest CD $35,833.06, HYSA $29,757.80. Rounding convention: totals are computed from unrounded values, so rounded parts may differ by a cent from their rounded sum.

Output · formula · meaning

Who uses this

• The saver with $10,000 to park for a year: they learn the CD wins by $77.89 on the defaults — and they check the 3.75% reverse to see how low the CD rate can go before the savings account catches it.
• The rate-cut watcher: they learn a savings rate that drops to 3.00% hands the CD a $103.74 lead — and they check the 5.00% reverse to see how high the new rate would have to jump for the savings account to tie.
• The two-year planner: they learn a 24-month term stretches the CD’s lead to $162.33 — and they check the 26-month reverse to see when the CD first clears $11,000.
• The IRA holder: they learn tax does not change the winner — at 0% tax the CD still wins by $77.89 — and they check the $64,194.73 reverse to see what deposit it takes for a $500.00 gap.

Accuracy & limitations

The math is first-principles: the CD ending value is the deposit times (1 + CD APY ÷ 12) to the power of the months; the savings account ending value is the deposit times (1 + starting APY ÷ 12) to the power of the first half of the term, rounded up, times (1 + new APY ÷ 12) to the power of the rest; the interest is the ending value minus the deposit; the after-tax interest is the interest times one minus the tax rate; the winner is the higher ending value. Every figure is rounded to cents half-up, and the totals are computed from unrounded values, so rounded parts may differ by a cent from their rounded sum. What the model cannot do is tell you what YOUR account will earn: it ignores early-withdrawal penalties on the CD, which can wipe out months of interest if you break the term; it assumes the savings rate changes exactly once, halfway through, while a real HYSA rate can move more than once and in either direction; it does NOT model FDIC/NCUA limits, which cap insured deposits; it does NOT model CD ladders, which split the deposit across several terms; and it does NOT model the fact that a CD rate is quoted as APY while the calculator compounds monthly at APY ÷ 12, so the effective annual return on the CD is slightly above the APY (4.50% APY → 4.5940% effective). Use it to size the trade-off, then check the current rates before you lock money up.

Frequently asked questions