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If you have $70,000 sitting in your bank account right now, you may be overwhelmed with your options. You can use that money to make a significant down payment on real estatefor example. Or you can buy a high-end vehicle – with cash. You can also pay down high-rate debt, invest it in stocks, bonds or precious metals. Or, as many savers may be contemplating in today’s inflationary economic environmentyou can simply save it for the future.
That said, $70,000 shouldn’t just be deposited into any savings account. Savers will need to be strategic with where it’s stored. And it certainly shouldn’t be kept in a traditional savings account, which comes with a tiny average rate of just 0.38% now. Fortunately, there are three high-rate alternative accounts to consider right now: certificates of deposit (CDs), high-yield savings and money market accounts. All come with rates exponentially higher than a traditional account, and with a CD, in particular, the rate will be fixedallowing savers to calculate their interest earnings with precision.
To better decide on an account type, it helps to know the interest-earning potential each can provide with a $70,000 deposit that’s made now. Below, we’ll crunch the numbers that savers need to know.
Start earning a high, fixed rate on your money with a CD account here.
$70,000 CD vs. $70,000 high-yield savings account vs. $70,000 money market account: Which will earn more now?
High-yield savings and money market accounts both have variable rates that, in a different rate climate, could make long-term interest-earning projections difficult to calculate. But with today’s elevated rates unlikely to drop anytime soon, savers can still gain a relatively accurate idea of what they stand to earn.
Here’s how much a $70,000 deposit into each account can earn over the next year, using the top rates available for each and the assumption that the variable rate accounts stay constant:
- $70,000 3-month CD at 3.90%: $672.74
- $70,000 high-yield savings account at 4.10% after three months: $706.73
- $70,000 money market account at 3.90% after three months: $672.74
- Most profitable account: The high-yield savings account
- $70,000 6-month CD at 4.10%: $1,420.59
- $70,000 high-yield savings account at 4.10% after six months: $1,420.59
- $70,000 money market account at 3.90% after six months: $1,351.94
- Most profitable account: The CD and high-yield savings account
- $70,000 9-month CD at 4.00%: $2,089.67
- $70,000 high-yield savings account at 4.10% after nine months: $2,141.65
- $70,000 money market account at 3.90% after nine months: $2,037.68
- Most profitable account: The high-yield savings account
- $70,000 1-year CD at 4.11%: $2,877.00
- $70,000 high-yield savings account at 4.10% after one year: $2,870.00
- $70,000 money market account at 3.90% after one year: $2,730.00
- Most profitable account: The CD account
Looking at these four scenarios, then, the money market account is the least profitable, no matter how long the money is kept in an account. CDs are favorable after a full year, while high-yield savings accounts are better after three and nine months. But the interest-earning differential between all three is negligible. That means that savers should look beyond these rates and review the structure and pros and cons of each account to determine which makes the most sense for them.
For some, a CD account could still be best, while others may prefer a high-yield savings or a money market account. Don’t discount the advantages of splitting your $70,000 into two or even all three accounts, though, which will allow you to earn the high rates with each while taking advantage of the unique features specific to each account.
Compare the top savings accounts available to you online now.
The bottom line
There is no uniform choice when deciding between a CD, high-yield savings or money market account, especially when there’s a five-figure deposit amount such as $70,000 in play. Instead, savers should carefully consider all three and look to speak with a banking representative who can better help them make a choice. Don’t wait too long to act, however, as you’ll miss out on the interest-earning opportunities that are readily available now. Consider, too, using an online marketplace which makes it easy to compare rates, banks, terms and more, all in one easy-to-navigate location.