The interest that accrues on a high-yield CD is compounding, meaning you'll earn interest on the accumulated interest.īanks design high-yield CDs to offer more significant returns than high-yield savings accounts or standard CDs with similar terms, but they often require a larger minimum deposit. However, if you withdraw your funds before the end of the term, you'll typically have to pay a penalty. When the CD matures, you can withdraw your money plus any earned interest. You make an initial deposit, and then the bank or credit union pays you a fixed interest rate for a set time.

High-yield CDs work much like any other certificate of deposit. Open an Account Today How do High-Yield CDs Work? For better financial health, click below and open yours now. With a CD account, reaching a short-term goal becomes easier. (In fact, some lenders use the two terms interchangeably.) 'High-yield' refers to the interest you earn, while 'jumbo' refers to the amount you invest to earn that rate. Whether you ask, 'What is a jumbo CD?' or 'What is a high-yield CD?' you're essentially asking similar questions. What's the difference between a Jumbo CD and a High-Yield CD? Like traditional CDs and bank accounts, the FDIC insures high-yield CDs up to $250,000 per depositor. Generally, higher-yield CDs require your money to be locked in the account for a longer period of time. Interest rates on CDs can vary widely, depending on the bank and your deposit amount. Typically, high-yield CDs have terms of close to one year or longer, with most banks and credit unions offering terms of up to five years. Online banks offer many CDs with the best rates, which have less overhead costs and can pass the savings on to customers in the form of higher APYs. The longer the term, the greater the return - as long as you don't need access to your cash. Banks and credit unions offer CDs with fixed terms ranging from a few months to five years (or even longer). Hawaii Alaska Florida South Carolina Georgia Alabama North Carolina Tennessee RI Rhode Island CT Connecticut MA Massachusetts Maine NH New Hampshire VT Vermont New York NJ New Jersey DE Delaware MD Maryland West Virginia Ohio Michigan Arizona Nevada Utah Colorado New Mexico South Dakota Iowa Indiana Illinois Minnesota Wisconsin Missouri Louisiana Virginia DC Washington DC Idaho California North Dakota Washington Oregon Montana Wyoming Nebraska Kansas Oklahoma Pennsylvania Kentucky Mississippi Arkansas Texas See Offer What is a High-Yield CD?Ī high-yield CD is a certificate of deposit, or CD, with a higher interest rate than an ordinary savings account or traditional CD.

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