CD vs. HYSA Calculator
Which earns more for your situation? Enter your amount, CD APY, HYSA rate, and model expected rate drops to find out.
When the CD wins
A CD earns more than a HYSA whenever the rate advantage of the HYSA at opening is smaller than the loss from subsequent rate cuts. The math: if a HYSA starts at 4.40% and drops to 4.15% after six months (a 25 basis point cut), the blended rate for the year is about 4.28%. A 12-month CD locked at 4.30% beats that by $2 per $10,000 — not dramatic, but the CD also locks that rate regardless of any further Fed action during the term.
The CD wins decisively when: the Fed cuts twice in quick succession (50+ basis points off the HYSA), the CD APY is close to or above the HYSA APY at opening, or the comparison period is long (24 months gives rate stability more time to compound). Slide the expected rate drop input above to 50 or 75 basis points to model an aggressive Fed cutting cycle.
When the HYSA wins
The HYSA wins when rates stay flat or rise. If the Fed does not cut during your comparison period, a HYSA at 4.40% beats a CD at 4.30% straightforwardly — and the HYSA can be withdrawn at any time with no penalty. The HYSA also wins if you need the funds before the CD matures: breaking a 12-month CD typically costs 90 to 180 days of interest, which can eliminate the rate advantage entirely on a short hold.
The HYSA is always the right choice when: you might need the money unexpectedly, you want to maintain optionality if a better rate appears, or you are uncertain about whether the comparison period will hold.
The rate drop model explained
The HYSA estimate in this calculator assumes your current HYSA rate holds for the first six months, then drops by the modeled basis points for the remainder of the period. This is a simplified approximation — in reality, rate cuts can happen at any point. The 25-basis-point default reflects one Fed cut of 0.25%, which is the standard increment. Set the drop to 50 if you believe two cuts happen in the first half of the year.
The CD interest calculation compounds daily for the full term at the fixed rate. No assumptions needed — the CD rate does not change regardless of Fed action during the term. This is the core value proposition of the CD: certainty, at the cost of liquidity.
When neither is obviously better: CD ladder
If the rates are close and your liquidity needs are uncertain, a CD ladder gives you the best of both worlds. A 4-rung ladder holding 3, 6, 9, and 12-month CDs on $10,000 gives you access to $2,500 every three months while locking in the CD rate on each rung. When each matures, you reinvest at the best available rate. Use the CD ladder calculator to model the blended yield for any ladder configuration.
Tax considerations
Both CD and HYSA interest is taxed as ordinary income in the year it is paid. The calculator shows gross earnings; your after-tax yield depends on your federal bracket and state income tax. For savers in the 32%+ bracket or high-tax states, Treasury bills (state-tax-exempt) may outperform both on an after-tax basis. Use the tax-equivalent yield calculator to compare after-tax returns for your specific situation.
It depends on how long you can lock up the money and whether you expect rates to fall. CDs pay a fixed rate — great if rates are expected to fall. HYSAs are variable and can drop any time. For money you will not need for 12 or more months, a CD typically earns more if rate cuts materialize. For emergency funds or money with uncertain timing, use a HYSA. The calculator above models the specific numbers for your situation.
HYSA rates follow the federal funds rate. When the Fed cuts rates, banks typically lower HYSA APYs within weeks. This calculator lets you model a rate drop so you see a realistic comparison, not just the best-case scenario. Set the expected drop to 25 for one Fed cut, 50 for two, or 0 to see the flat-rate comparison.
You can break a CD early, but the early withdrawal penalty — typically 90 to 180 days of interest — offsets or eliminates the benefit of the higher HYSA rate. The early withdrawal calculator shows whether breaking a specific CD is worth it at any break date and rate differential.
If the HYSA starts above the CD rate, the CD wins when rate cuts push the HYSA’s blended rate below the CD rate. With a HYSA at 4.40% and a CD at 4.30% over 12 months, one 25bp cut after six months makes the comparison roughly even. Two cuts of 25bp each make the CD the clear winner. Slide the expected rate drop input above to find the exact break-even for your specific rates.
Yes. Both CDs and HYSAs at FDIC-insured banks are covered up to $250,000 per depositor, per institution, per ownership category. There is no safety advantage of one over the other within these limits. Use the FDIC insurance calculator to confirm coverage for balances above $250,000.