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PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlX3ZpZXdwb3J0X2RldGVjdGlvbi5qcyI+PC9zY3JpcHQ+PHNjcmlwdCBhc3luYyB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiPm15ZmlXYXRjaFdpZGdldCgnbXlmaVdpZGdldF8wJyk7PC9zY3JpcHQ+Sarah Li-Cain is a finance writer, podcast producer and an Accredited Financial Counsellor® specializing in banking, loans, investment and insurance topics. Her work has appeared in major outlets such as US News. CNBC Select, Fortune, and Business Insider.Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.A high-yield certificate of deposit (CD) could be a good investment vehicle if you’re looking to earn more than what you could get with a savings account but don’t want to risk too much of your money. Rates have been skyrocketing over the past year, in some cases topping 5%. That’s the highest they’ve been in more than 15 years.High-yield CDs, however, do come with some considerations. Understanding the ins and outs — including where to find the highest CD rates — is crucial in your research to determine whether it’s the right choice for you. What is a high-yield CD?A high-yield CD is a type of certificate of deposit that earns a better interest rate than average. Just like any other CD, a high-yield CD requires you to make an initial deposit and agree to keep it there for a predetermined amount of time, also known as the maturity date. In exchange, you’re guaranteed to earn a certain amount of interest. A high-yield CD may not be as common as more traditional CDs and may require a larger deposit. They’re typically offered by online banks, which are able to deliver higher interest rates since they don’t have the overhead of brick-and-mortar institutions.How does a high-yield CD work?A high-yield CD works much like a regular CD with the exception of the interest rate. The bank or credit union you go with will show you the interest rate up front and how often interest compounds so you can estimate how much you’ll earn by the maturity date.Once your account is open, you’ll make your first and only deposit. Interest will compound either monthly, quarterly, or annually until the end of the term. When your CD matures, you’ll typically have seven days to decide what to do next. You can choose to renew your CD with the same term, move your deposit to a CD with a different term (and possibly at a different interest rate), or withdraw your money.If you withdraw your money before the CD’s maturity date, you may have to pay an early withdrawal penalty. How much it will be will depend on your CD’s terms and conditions. High-yield CD vs. high-yield savings accountBoth high-yield CDs and high-yield savings accounts are deposit accounts held at banks or credit unions. Both earn interest, in some instances as high as 5%. The main difference is how soon you can access your funds. With a high-yield CD, you’re required to keep your money in place until the maturity date or face an early withdrawal penalty. On the other hand, you can typically withdraw money from a savings account whenever you want. You can also deposit additional funds in a savings account, whereas with a CD you deposit money in a lump sum. While both high-yield CDs and high-yield savings accounts offer higher than average interest earnings, savings account rates can fluctuate. With CDs, your interest rate is guaranteed until your account matures. Depending on the financial institution, high-yield CDs generally offer higher interest rates than high-yield savings accounts.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 a high-yield CD safe?High-yield CDs are generally safe since they’re either FDIC- or NCUA-insured, depending on whether they’re at a bank or credit union. That means you can reclaim your money (in most cases up to $250,000) if the financial institution goes bankrupt or fails. Keep in mind that limit applies to each type of banking product at a financial institution. So if you have three CDs that add up to $500,000 and the bank fails, you’d still be insured only up to $250,000. And, there’s another way they reduce your risk: Since they offer a guaranteed interest rate on the amount you deposit, you’ll get a consistent return, even if interest rates on other savings products go down. Should you put your money in a high-yield CD?High-yield CDs are a great fit for those who don't need to access all of their money for several months or more and are interested in earning a higher interest rate than what's offered by a savings account. For instance, if you’re planning to buy a home in a year and want to grow your down payment, it may make sense to put the money in a CD so it earns more interest than it would in a regular savings account. However, if you’re not sure when you’ll need to access the cash, or are more interested in earning a greater return over a longer period of time, then it may be better to consider alternatives. For example, it makes more sense to keep your emergency fund in a savings account since you want to be able to add it to it and you never know when you’ll need to dip into it. Or, if you have more than five years to grow your money and want to get a higher return, a brokerage account may be the way to go. In most cases, people spread their money across a range of accounts that serve different purposes.Whether you choose to put your money in a high-yield CD or other savings vehicle, it’s important to do your research to see whether the product suits your financial needs. However, if you’re looking for a relatively low risk investment and won’t need the money anytime soon, a high-yield CD could be worth it.Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at lauren.williamson@hearst.com.