Last week, Capital One released a new 11-month certificate of deposit (CD) that pays 4.30% APY. But the big bank already offers a high-yield savings account with a 4.25% APY. So which is better? While the APY on Capital One’s new CD is slightly higher than its high-yield savings account, other factors should be conside🐽red before choosing one.

For starters, the Federal Reserve ཧlowered the federal funds rate last week for the first time since March 2020. Banks and credit unions have already started to lower APYs on their savings accounts, and CD rates are also starting to dip. So, locking in a CD with a high rate today could be more profitable than l🌠e♏aving your money in a high-yield savings account poised to have a lower APY come the new year.

Before deciding between a CD and savings account, especially at a big bank like Capital One, it’s essential to compare the two and compare rates from other institutions.

Should You Open a CD or Savings 🎃Account for the Next 11 M꧂onths?

CDs offer a guaranteed return, meaning the APY won’t change during the CD term. However, you’re also locking in your money for the agreed time and won’t be able to 澳洲幸运5官方开奖结果体彩网:withdraw early🙈 without payin🌠g a penalty. For 11-month CDs, Capital One charges three months of interest for early withdrawals.  

High-yield savings accounts offer more liquidity, allowing you to withdraw money when you need it every month (though check to see if there are 澳洲幸运5官方开奖结果体彩网:withdrawal limits with your bank). Unlike CDs, however, interest rates on high-yield accounts are variable. While Capital One is offering 4.25% on its savings account today, that rate could c🍌hange by tomorrow, and your expected returns could rise or fall. 

So how much more will a 4.30% APY earn you compared to a 4.25% APY, assuming interest rates rema🐷in the same🐓 for 11 months?

If you make an initial deposit of $5,000 and don’t touch it for 11 months, Capital One’s 11-month CD would earn about $197 in interest. If you deposiꦿted the same amount into Capital One’s high-yield savings account for 11 months, with no additional deposits, you’d earn about $194. In other words, you’d make roughly $3 mor✤e with the CD—not much benefit for giving up access to your money for that period.

But again, given the Fed’s recent rate cut and expectation for rates to continue falling through 2025, Capital Oneꦫ’s 11-month CD’s guaranteed rate of 4.30% could be worth it. The main trade-off between the CD and the bank’s high-yield savings account is liquidity vs. interest rate guarantee, not their slight difference in APY. And if your goal is to maximize your earnings, you may want to go with another bank altogether. 

Other Banks Pay Higher CD and Savings Rates

If you’re a Capital One customer, openi🔥ng a high-yield savings account or CD at Capital One may be easy. But you can earn more e🃏lsewhere.

The 澳洲幸运5官方开奖结果体彩网:top-paying high-y🌱iel⭕d savings accounts offer rates of up to 5.50%—125 basis points more than Capital One’s 4.25% savings account. These banks include Pibank (5.50%), Poppy Bank (5.50%), and Western Alliance Ba🌟nk (5.31%🌠), among others. If you deposited $5,000 in a savings account with a 5.50% interest rate, you’d earn about $251 over the course of 11 months.

Similarly, the 澳洲幸运5官方开奖结果体彩网:highest 1-year CD rate is 5.15%, offered by Abound Credit Union for a 10-month term. That’s 85 basis points higher than the Capital One 11-month CD. If you deposited $5,000 into this CD, you’d earn about $214 by the end of the 10-mಞonth term. That’s more money earned in a shorter period of time🐠 than the Capital One CD.

While these top savings and CD APYs will likely drop with further Fed rate cuts, they’re still a wide margin above Capital One’s respective 4.25% and 4.30% rates, which are poised to fol🌃low the same downward trend. Locking them in now should allow you to earn more money before rates drop.

Capital One or a New Bank?

꧃ Capital One’s 11-month🐼 CD and high-yield savings account can both be great savings options—especially if you already have a Capital One checking account and are familiar with the bank and its platform. 

Alternatively, you could opt for a higher-paying CD or savings account elsewhere. Just know that the top-paying CDs and savings accounts frequently change. Always getting the best rate will likely mean routinely opening and funding new b🌃ank accounts.

If you’re choosing between Capital One’s 11-month CD and high-yield savings account, however, know that both 👍products are FDIC-insured with no minimum deposit requirements, no monthly fees, and interest compoundinౠg monthly. 

The real question is whether you want to lock in a high APY now before savings and CD rates potentially fall come November when the Fed meets next or if you’d rather have more liquidity. Of course, you can diversify your savings st💎rategy by signing up for both products. The right choice ultimately depends on your savings goals and priorities.

How We Find the Best CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), the CD's minimum initial deposit must not exceed $25🌄,000, and any specif🉐ied maximum deposit cannot be under $5,000.

Banks must be available in at least 40 states. And while some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, 澳洲幸运5官方开奖结果体彩网:read our full methodology.