Certificates of Deposit let savers lock in a set interest rate for a certain amount of time. Unlike Certificates of Deposit, most ordinary online savings accounts might pay a competitive current yield right now, but savers are exposed to the fluctuations in interest rates.
For example if you had a two year time horizon for your savings and you expected interest rates to increase significantly then opening a high-yield online savings account could be a better deal than locking your money for a fixed term Certificate of Deposit.
If you expected interest rates to decline over the next few years however, then locking in a higher interest rate today in a CD would be a much better strategy.
Both accounts are insured from the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 per individual.
You could view the best interest rates on CD’s on this page.