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With inflation increasing, should you open a CD or savings account?

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Both CDs and high-yield savings accounts have appealing features to consider in today's economy. Getty Images/iStockphoto

Following months of encouraging signs inflation was abating, the summer saw consecutive reports that it's actually ticking back up again. Inflation rose in July and August, with many Americans still feeling the pain at the supermarket and the gas pump. Against this backdrop, many find themselves looking for any edge they can get. But with inflation stubborn and the interest rates meant to tame it at a 22-year high, there aren't many viable alternatives to pursue.

Traditional savings vehicles, however, are two of the rare opportunities that have come out of today's inflationary environment. Specifically, interest rates on high-yield savings and certificates of deposit (CD) have exponentially increased in recent months, making both appealing ways to stem the financial pain many are currently experiencing.

But which one should you open now? Or should you consider depositing money into both?

Start by exploring your CD and savings account options here now and start earning more interest on your money.

Should you open a CD or savings account now?

There are multiple reasons why you may want to open a CD now. For starters, CD interest rates are the highest they've been in years, with some hovering just under 6%. And unlike the recent past, savers can secure competitive rates on both short-term and long-term CDs, giving you the flexibility to maximize your earning potential. 

CDs are also safe. They're FDIC-insured, and they'll protect your funds from what may have otherwise been an endless cycle of deposits and withdrawals. If you attempt to withdraw funds early, you'll have to pay a fee (usually some or all of the interest earned to date).

But that may be a risk worth taking if you know you can boost your bottom line simply by making a $1,000 deposit or more. Plus, there are some no-penalty CDs to choose from, although those tend to come with lower rates than counterparts that have clear terms and penalties.

Check your CD options here to see what rate you could secure.

At the same time, high-yield savings accounts have multiple advantages in today's market. While rates are slightly lower than what you can find with the very best CDs, they're still upwards of 4.5%, particularly if you're willing to open a high-yield savings account online. And, unlike CDs, your money will be free to access as you would with a regular savings account.

Plus, if you think interest rates will rise once again - as Federal Reserve chairman Jerome Powell strongly suggested last month - you'll be in a prime position to earn that higher rate. That's because interest rates on high-yield savings accounts are variable and subject to change at any moment. While this may not always be seen as a highlight, it's generally considered a positive in today's market when rates keep ticking up.

Get started with a high-yield savings account here now.

What about opening both accounts simultaneously?

There are some major advantages of opening both a CD and high-yield savings account simultaneously. By doing so, savers can earn the higher rate CDs come with while also leaving a portion of their funds accessible in a high-yield savings account. Each individual will need to determine if this is the right path for them,or if they're better off with just one or the other.

That said, however, just make sure to get your money out of a regular savings account. You're likely losing money by keeping your funds parked there considering the average interest rate for regular savings account is currently just 0.43%.

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