Forget CDs, Even With Rates at 4%. Here's Where I'd Put My Money Now
- - Forget CDs, Even With Rates at 4%. Here's Where I'd Put My Money Now
Ryan Wilcox, The Motley FoolFebruary 14, 2026 at 6:05 AM
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Certificates of deposit (CDs) can be a solid medium-term savings option -- but in lots of cases, it probably isn't the best option.
Even though top CDs can earn you as much as 4.00% APY, there are ways to either 1) earn much more or 2) earn a similar return while keeping your money totally accessible.
Bottom line: If flexibility and long-term return matter to you, there are much better uses for your cash. Here are three places to look before opening a CD.
1. Paying off debt
First things first: If you're fighting off high-interest debt, paying it off should absolutely be your top priority.
That's because right now, the average credit card APR is about 21%, according to the Federal Reserve. That means paying off credit card debt is basically a guaranteed 21% return, which CDs -- or most other investments, for that matter -- can't compete with.
A good rule of thumb: Try and pay off any and all debt before you think about investing. It's boring, and you might not feel like it's making you rich, but it's the first step toward financial freedom.
Want an easier path toward paying off debt? A balance transfer credit card can help you do it. Check out our picks for the best balance transfer cards available now.
2. High-yield savings accounts
Want a comparable return to CDs without having to lock up your money? You probably want a high-yield savings account (HYSA).
Right now, the best HYSAs are paying APYs that rival top CDs – but the difference is that just like traditional savings accounts, HYSAs let you access your money anytime. They're also FDIC-insured up to $250,000, so your money's just as safe.
Put simply, if you're looking for a safe, profitable place to put your emergency fund, an HYSA is the way to go.
Ready to earn more on your savings? See our full list of the best high-yield savings accounts available now.
3. The stock market (specifically, index funds)
Looking for serious long-term growth? If so, a CD probably isn't the best choice, either.
Consider this: Over the last 30 years, the average return of the U.S. stock market was 9% per year, as measured by the S&P 500 Index. That's more than double the rate of the best CDs today.
That means that, if history's any indication, a simple S&P 500 index fund will easily beat out current CD rates in the long run. Yes, 4.00% APY might be enticing -- but the truth is, you can do better.
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Source: “AOL Money”
