CDs vs. Brokerage Account: Which Is the Better Place for Your Savings Right Now?

Motley Fool11-11

KEY POINTSOpening a CD gives you safety and a fixed yield on your savings, but brokerage accounts have more intriguing upsides.The best brokerage accounts let you invest in bond ETFs, money market ...

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Find out how the best brokerage accounts offer flexible, high-yield alternatives to CDs.","collect":0,"end_time":0,"defaultTopTitle":"fool.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4516":"特朗普概念","IE00B19Z3581.USD":"Legg Mason ClearBridge - Value A Acc USD","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","BK4585":"ETF&股票定投概念","IE00B19Z3B42.SGD":"Legg Mason ClearBridge - Value A Acc SGD","LU0130518102.USD":"HARRIS ASSOCIATES GLOBAL EQUITY \"R\" INC","LU1861217088.USD":"贝莱德金融科技A2","BK4166":"消费信贷","LU1861220207.SGD":"Blackrock FinTech A2 SGD-H","BK4116":"互联网服务与基础架构","BK4588":"碎股","LU0130102774.USD":"Natixis Harris Associates US Equity RA USD","CD":"秦淮数据","LU0648000940.SGD":"Natixis Harris Associates Global Equity RA SGD","COF":"第一资本","IE0002270589.USD":"LEGG MASON CLEARBRIDGE VALUE \"A\" (USD) INC","LU0477156797.USD":"HARRIS ASSOCIATES GLOBAL EQUITY \"RE\" (USD) ACC","LU0648001328.SGD":"Natixis Harris Associates US Equity RA SGD","LU0130103400.USD":"Natixis Harris Associates Global Equity RA USD","LU2360107671.USD":"BGF FINTECH \"A4\" (USD) INC","LU1201861165.SGD":"Natixis Harris Associates Global Equity PA SGD","LU1201861249.SGD":"Natixis Harris Associates US Equity PA SGD-H","LU0211331839.USD":"FRANKLIN MUTUAL GLB DISCOVERY \"A\" (USD) ACC","LU0980610538.SGD":"Natixis Harris Associates US Equity RA SGD-H"},"translate_title":"CD与经纪账户：现在哪个地方更适合您的储蓄？","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"US7Y.BOND":0.9,"US10Y.BOND":0.9,"US12M.BOND":0.9,"US2Y.BOND":0.9,"US30Y.BOND":0.9,"COF":0.9,"CD":0.9,"US3Y.BOND":0.9,"US5Y.BOND":0.9,"US6M.BOND":0.9},"content_text":"KEY POINTSOpening a CD gives you safety and a fixed yield on your savings, but brokerage accounts have more intriguing upsides.The best brokerage accounts let you invest in bond ETFs, money market funds, and other high-yield CD alternatives.You can get FDIC insurance and high yields from many brokerages' cash sweep accounts.Recent discussion about Fed rate cuts has caused many Americans to wonder where to keep their savings. Opening a CD is not your only choice. CDs give you fixed yields and can let you lock in a high APY (in case rates go down further), but they also tie up your money.As an alternative to CDs, consider keeping your savings in a brokerage account. The best brokerages give you flexible ways to keep your money safe. They also let you invest your cash in ways that will help your money grow.Let's compare the pros and cons of CDs vs. brokerage accounts.Why open a CD: Safe, fixed APYsOpening a CD can be a good choice if you have some extra cash in savings and aren't afraid to lock up your money for a specific length of time. The best CDs are offering APYs of 4.00% and higher, depending on the CD length or term.Our Picks for the Best High-Yield Savings Accounts of 2024Capital One 360 Performance SavingsAPY4.00%                        Rate info                Circle with letter I in it.      See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Oct. 23, 2024. Rates are subject to change at any time before or after account opening.      Min. to earn$0Open Account for Capital One 360 Performance SavingsOn                          Capital One's             Secure Website.                                                  Member FDIC.                                              APY4.00%                        Rate info                Circle with letter I in it.      See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Oct. 23, 2024. Rates are subject to change at any time before or after account opening.      Min. to earn$0American Express® High Yield SavingsAPY4.00%                        Rate info                Circle with letter I in it.      4.00% annual percentage yield as of November 11, 2024      Min. to earn$0Open Account for American Express® High Yield SavingsOn                          American Express's             Secure Website.                                                  Member FDIC.                                              APY4.00%                        Rate info                Circle with letter I in it.      4.00% annual percentage yield as of November 11, 2024      Min. to earn$0CIT Platinum SavingsAPY4.70% APY for balances of $5,000 or more                        Rate info                Circle with letter I in it.      4.70% APY for balances of $5,000 or more; otherwise, 0.25% APY      Min. to earn$100 to open account, $5,000 for max APYOpen Account for CIT Platinum SavingsOn                          CIT's             Secure Website.                                                  Member FDIC.                                              APY4.70% APY for balances of $5,000 or more                        Rate info                Circle with letter I in it.      4.70% APY for balances of $5,000 or more; otherwise, 0.25% APY      Min. to earn$100 to open account, $5,000 for max APYThe best reasons to open a CD are safety and fixed APYs. CDs give you the safety of FDIC insurance and you're guaranteed to get the same APY for the length of your term -- even if the Fed cuts interest rates.Unfortunately, there's a big downside to CDs: They charge early withdrawal penalties. If you have to pull your cash out of the CD sooner than expected, you could lose most or all of the interest you earned.CDs are inflexible and the yields are not super high. This may make brokerage accounts a better choice. Click here to learn more and see our curated list of the best brokerage accounts. Many offer high-yield \"cash sweep\" accounts that can be better alternatives to CDs.Why open a brokerage account: Flexibility and higher return on investment (ROI)Brokerage accounts are not just for buying stocks. The best brokerages can also be more flexible than CDs and also deliver higher yields on your savings.Here are a few ways a brokerage account can make your cash work harder than a CD:1. Cash sweep -- high-yield savingsThe best brokerage accounts often have high-yield \"cash sweep\" accounts, also called \"cash management accounts.\" These accounts typically have FDIC insurance, just like a bank account, and the APYs can be higher than CDs.Unlike CDs, the APYs on cash sweep accounts are not fixed. If the Fed cuts interest rates, these APYs will likely come down too. But brokerage accounts can help you earn a competitive yield on your cash. Some of the best cash management accounts, like Betterment Cash Reserve account, are currently offering up to 4.25% APY.2. Money market fundsMany brokerage accounts offer money market funds as an alternative to CDs. Like cash sweep accounts, money market funds often pay higher yields than typical bank savings accounts and some of the best CDs.Just like money market accounts at a bank, the money market funds in a brokerage account are invested in low-risk, short-term assets like Treasuries. As of this writing, some of the best money market funds from top brokerages like Vanguard were offering variable APYs of up to 4.70% (average 7-day SEC yield).Although money market funds do not get FDIC insurance, they are generally considered to be some of the safest investments and a good place to keep your cash.3. Bond ETFsIf you want another alternative to CDs, brokerage accounts let you invest your cash in the bond market. Bond ETFs can help you earn yield and benefit from rising bond prices. If you don't need your cash anytime soon, but don't want to risk the volatility of stocks, investing in bonds can be a good choice for your savings.Investing in bonds is not risk free. Bond prices can go down, and some types, like higher-yield corporate bonds, can have a higher risk of default. But many savers who have some extra cash and don't want to be stuck with low-interest bank accounts or CD early withdrawal penalties might want to include bond ETFs in their investment portfolios.Bottom lineWhen you're thinking about where to keep your savings, it isn't a question of just savings accounts vs. CDs. Brokerage accounts offer benefits that banks do not. The best brokerages can give you high-yield cash accounts, bond ETFs, money market funds, and other choices that will help your money grow.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.1","shortVersion":"4.29.1","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2482491787"}