You’ve worked hard to get on top of your finances. Maybe you’ve paid down credit card debt or stuck to a budget, and you’re beginning to see that number in your savings account grow with each passing month. Congratulations! Not everybody is able to get the point where they have financial peace of mind, and you deserve to pat yourself on the back.

Now that you’ve saved some money, you may be asking yourself: How can I make this money grow even more? To increase your financial growth, you’ll want to consider two different types of accounts: high-yield savings accounts and certificate of deposit (CDs). Both are safe and effective ways to make the most of your savings!

Meet Your Savings Sidekicks

You can think about high-yield savings accounts and CDs as being your financial assistants, each with its own strengths.

The Flexible Friend: High-Yield Savings Account

What makes this account so flexible? You have access to your money whenever you need it, and it earns more interest than a regular savings account. This is a great option if you think you may need to withdraw money or wish to establish a rainy-day fund. However, the rates on these accounts can change at any time and are often lower than those offered by CDs.

The Long-Term Planner: Certificate of Deposit (CD)

A CD is more like your assistant with a vision towards the future. When depositing in a CD, you agree to leave it for a set time period—from 6 months up to 10 years, in some cases. You cannot withdraw from the CD before the term ends without a penalty, but you get a fixed interest rate. This means the growth is predictable and dependable.

So how do you know which option is right for you?

When to Choose a High-Yield Savings Account

A high-yield savings account is perfect if you want financial growth without sacrificing accessibility. Here’s what we think are its top benefits:

• You Want Easy Access to Your Money: Maybe you won’t need to move or access your money, but you value the peace of mind that comes with knowing you could. Earn solid interest while keeping your cash in sight.
   
• You’re Building an Emergency Fund: Financial experts agree that you should be able to survive for 3-6 months off an emergency fund. A high-yield savings account lets you build this fund while still be able to use it if you need to.
   
• You’re Not Sure What You’ll Need (or When): Life is unpredictable. If you don’t feel comfortable forecasting your financial situation, then you’ll appreciate the flexibility this account offers.
   
• You Think Interest Rates Might Go Up: While changing interest rates might be a drawback for some, if interest rates are forecasted to increase, then a high-yield savings account will likely shift its interest rate along with the market. This means a bigger financial yield and the flexibility of keeping your dollars in reach.

When to Choose a CD

If you’re in a comfortable financial place, it might be better to lock in an interest rate, let it grow, and not think about it. A CD might be a better path for you if the following is true:

• You Want a Fixed, Reliable Interest Rate: CDs guarantee their rates. Even when the market fluctuates, the rates don’t. With a CD, you’ll be able to predict your savings far in advance.
   
• You Won’t Need the Money for a While: CDs work very well if you’re saving for a purchase further down the road. College tuition, home improvements, and mortgage downpayments are examples of long-term goals that a CD could help you build towards.
   
• You’re Tired of Rate Changes and Market Drama: Market drama can equate to personal stress, especially when it affects your money. Want to avoid that unpredictability? CDs are rock solid when it comes to their interest rates.
   
• You Want to Stay Disciplined: If you are an impulse spender, then putting your money in a CD can prevent you from spending it. Early withdrawals are penalized, so you can save without the temptation of withdrawing funds.
   
• You’re Already Covered for Emergencies: Since you won’t have access to your funds, it’s best to make sure you are covered for emergencies before putting money into a CD. Think: do you have “extra” money saved that you want to grow? CDs are the smart choice for those savings you won’t need right away.

Secret Savings Strategy: Use Both

Here are the advantages of spreading your savings across accounts:

• You Get Flexibility and Discipline: Maybe you’re wary about locking up too much of your savings into a CD, but you want to reduce the temptation to spend your savings. Split the difference and keep the accessibility while practicing long-term planning.
   
• Less Stress About “Timing the Market”: There’s no perfect time to start saving. Interest rates ebb and flow. Using both types of accounts means you get the stability of a CD with the potential for improved rates with a high-yield savings account.
   
• You Can Set Up a CD Ladder: A CD ladder involves opening different CDs with different maturity dates (say, 1-year to 5-year). This gives you the option to withdraw money or reinvest the matured CD. Combining this strategy with a high-yield savings account allows regular access to your money and greater flexibility for withdrawing or reinvesting.
   
• You Build a Habit of Saving in Layers: You’re going to be saving for many different things. Utilizing high-yield savings accounts for things like an emergency fund or a vacation, while saving CDs for the big things, like tuition or a house, is a smart and sustainable strategy to meet your goals.

Ready to Choose? We’ll Help You Run the Numbers

Still unsure of which option is best for you? Visit one of our Greater Philadelphia branches, give us a call, or even apply for a new savings account online. The financial experts at 1st Colonial Community Bank are happy to walk you through your options and find a savings path that makes the most sense for you.