$2,500 CD vs. $2,500 high-yield savings account vs. $2,500 money market account: Which will earn more over the next year?

Savers should always be exploring the best and most effective ways to grow and protect their money. And that’s true whether the interest rate environment is elevated, as it is currently, or not. And it’s true even for those savers looking for a home for smaller amounts of money. While a certificate of deposit (CD), high-yield savings or money market account can all function as effective and valuable homes for a five or six-figure sum of money, the reality is that all three can also be smart places to keep smaller amounts, too. If you have $7,500 or even $2,500 to deposit, for example, all three accounts will allow you to earn exponentially more interest on your funds than you would if you kept your money in a traditional savings account now.

At the same time, these accounts operate in similar but not identical ways. That means the interest rate structure will vary, as will the rates and subsequent returns on each. To best determine the merits of a $2,500 deposit into any of these accounts, it helps to know the interest-earning potential each now represents. Below, we’ll crunch the numbers that savers should know before getting started.

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$2,500 CD vs. $2,500 high-yield savings account vs. $2,500 money market account: Which will earn more over the next year?

High-yield savings and money market accounts have variable interest rates that will change over time, though that’s less of a pressing concern now with interest rates steady and unlikely to change significantly through the end of the year. CD accounts, meanwhile, have rates as high as the top high-yield savings and money market accounts, and they’ll be locked and will hold through the account’s maturity date. Interest-earning speculation for the former two accounts, then, will be a bit speculative, while prospective CD account holders will be able to determine their interest earnings with precision. 

Here’s how much a $2,500 deposit into each will earn in interest over the next year, assuming the variable rates hold and that no fees or penalties are levied against any account:

• $2,500 6-month CD at 4.10%: $50.74
• $2,500 high-yield savings account at 4.03% after six months: $49.88
• $2,500 money market account at 3.90% after six months: $48.28
• Most profitable account: The CD account

• $2,500 9-month CD at 4.00%: $74.63
• $2,500 high-yield savings account at 4.03% after nine months: $75.19
• $2,500 money market account at 3.90% after nine months: $72.77
• Most profitable account: The high-yield savings account

• $2,500 1-year CD at 4.10%: $102.50
• $2,500 high-yield savings account at 4.03% after one year: $100.75
• $2,500 money market account at 3.90% after one year: $97.50
• Most profitable account: The CD account

The CD account is more profitable in two of these three scenarios and, unlike the other accounts, the interest rate will be locked and guaranteed as long as the saver doesn’t attempt to withdraw money from the account prematurely. But that sacrifice may not be achievable for every saver, and it may not even be necessary if they can earn a similar return with accounts that they can still add to or withdraw from. 

Money market accounts, for example, will even allow savers to write checks, streamlining their banking needs in a way that these other accounts cannot. So it’s worth closely examining all three to best determine which makes the most sense for you, both now and over the next 12 months.

Compare your top savings account options here to learn more.

The bottom line

Over the next six months, savers will earn more interest with a $2,500 CD than they will with a high-yield savings or money market account. And while the high-yield savings account is positioned to be slightly more profitable over the next nine months, the CD still comes out on top after a full year. Still, the interest-earning potential of all three account types is similar right now, meaning that savers should instead shift their focus to the type of account they want – one with a fixed rate or one with a variable rate. By answering that question, they can best decide on which makes the most sense for their $2,500, or if the final choice is to actually split their funds between two or even all three of these accounts.