HYSA Q&A Author: Hans Goldstein, NPN 20602398 Last updated: 2026-06-27

Should I Move From HYSA to CD When Rates Rise?

TL;DR

When rates are rising, stay in your HYSA. The HYSA's variable rate moves up within 1-4 weeks of each Fed hike, while a fixed CD locks you at today's rate even as new CDs pay more next month. The mathematical exception is when CD rates are already 100+ bps above HYSA rates and the rate cycle is close to peaking; then a short-term CD can lock the inverted spread. For most savers in a rising-rate environment, HYSA is the right instrument.

The short answer

In a rising-rate environment, the HYSA almost always beats a same-term CD opened today. The HYSA's rate is variable and tracks the Fed funds rate up within 1-4 weeks of each FOMC hike. A CD is locked at the rate you sign for, even as new CDs come to market 25, 50, or 75 basis points higher next quarter.

The only time the CD wins in a rising-rate cycle is at the peak, when the market starts pricing in future cuts and short-term CD rates briefly exceed HYSA rates by 100+ bps. At that inflection point, a short-duration CD (12-24 months) can lock in the high before the HYSA starts dropping. But you cannot reliably identify the peak in real time, and the spread usually only opens for a few weeks.

Why HYSAs win during rate hikes

HYSAs are priced off a benchmark that closely tracks the Fed funds rate. When the FOMC raises 25 bps in March, your HYSA APY typically moves up 15-25 bps within the next month. The pass-through ratio varies by bank — aggressive online banks like Ally, Marcus, and Discover pass through 80-90% of Fed hikes; legacy big banks pass through 5-20%.

A 5-year CD opened today, by contrast, locks in today's curve. The bank has already hedged the rate exposure with a 5-year swap, and your money is contractually committed at that rate even if the Fed raises another 200 bps over the next 24 months.

Worked example: rising rates, $100,000 over 2 years

Assume the Fed is in a hike cycle. Starting HYSA APY = 4.25%. Starting 2-year CD APY = 4.40%. Fed hikes 25 bps every quarter for 4 quarters, then pauses.

Quarter	HYSA APY	2-yr CD APY (locked at 4.40%)
Q1 (today)	4.25%	4.40%
Q2 (+25 bps)	4.45%	4.40%
Q3 (+25 bps)	4.65%	4.40%
Q4 (+25 bps)	4.85%	4.40%
Q5 (+25 bps, pause)	5.05%	4.40%
Q6-Q8 (pause)	5.05%	4.40%
2-year blended APY	~4.71%	4.40%
Interest earned on $100K	~$9,640	~$9,000

The HYSA wins by approximately $640 over the 2-year window because it captured each of the four hikes within 1-4 weeks, while the CD missed all of them.

The exception: rates near the peak

Late in a hiking cycle, the bond market often inverts and starts pricing in cuts before they happen. CD rates can briefly run 75-150 bps above HYSA rates during this window. If you spot the inversion and have a 1- to 3-year horizon, locking a CD at the peak is mathematically correct.

Signs you are near the peak:

Fed dot plot shows no more hikes for the next 12 months.
2-year Treasury yield is dropping while Fed funds is flat.
5-year CD APY is above 1-year CD APY (inverted CD curve unwinding).
Fed Chair starts talking about "data-dependent" instead of "appropriate to firm."

The hard part is timing it. You will not get the absolute peak; you might get within 25-50 bps of it. That is still better than holding a HYSA all the way down through a 200 bps cutting cycle.

When the answer changes

The HYSA-during-hikes rule has three real exceptions:

You need rate certainty. A retiree planning the next 24 months of cash flow may rationally accept a slightly lower CD rate for known income. Variability of HYSA income complicates planning.
You have already hit the peak. Once the Fed announces a pause and the bond market starts pricing cuts, the math flips. Then you should be locking in CDs or MYGAs at the high, not chasing the variable HYSA down.
Your HYSA bank is slow on pass-through. If you bank at a legacy institution that passes through 20% of Fed hikes, the HYSA stops being a HYSA. Move to an online HYSA with proven pass-through history, or accept the CD lock-in.

The mirror question: what about falling rates?

Symmetric and opposite. When rates are falling, lock CDs and MYGAs long; the HYSA is racing the Fed down. See our companion piece: Should I move from HYSA to CD when rates fall?

Common mistakes

Locking a long CD early in the hike cycle. Worst possible decision. You miss every subsequent hike and watch your locked rate get undercut by new issues for years.
Chasing teaser rates. Some banks advertise "5.50% APY 7-month CD" during hike cycles. Read the small print — renewal is usually at the standard rate, which is well below the teaser. Single-cycle promo rates rarely move the multi-year math.
Ignoring the post-peak window. The 90 days after the final hike is often the best CD-lock window of the cycle. Many savers miss it because they have been trained to stay in HYSA.
Switching too often. The 1-3 day ACH transfer time means each move costs you a few days of interest. Do not chase 10 bps between banks. Move when the spread is 50+ bps or when the rate cycle clearly turns.

What to do next

Check the current Fed funds rate and the consensus for the next FOMC meeting. If the market expects more hikes, stay in HYSA. If the market expects a pause or cuts, start ladder-shopping CDs and MYGAs at the longer end of the curve.

For balances over $100K, the MYGA market is currently quoting 5.30-5.50% on 5-year contracts, which is 100-125 bps above the average HYSA. If you are in a 22%+ tax bracket and have a 3-5 year horizon, the MYGA also defers tax versus the HYSA's annual 1099-INT. Worth a side-by-side. See HYSA vs MYGA for 3-year money.

Frequently asked follow-up questions

How long does it take for my HYSA APY to update after a Fed hike?

Online banks like Ally, Marcus, Discover, and Capital One 360 typically adjust within 1-4 weeks of an FOMC meeting. Legacy big banks may take 2-3 months or simply skip the pass-through entirely on smaller hikes.

What is the historical pass-through ratio for top HYSAs?

From 2022 through 2024, Marcus and Ally passed through approximately 75-90% of Fed hikes within 6 weeks. Chase Savings and Bank of America Standard Savings passed through under 10%. The pass-through ratio is the single most important HYSA shopping criterion in a moving-rate environment.

If I locked a CD before the hike cycle started, should I break it?

Run the math: compare the early-withdrawal penalty (typically 6-12 months of interest on the locked rate) against the spread between the locked rate and a current new CD or HYSA over the remaining term. If the rate gap is more than 100 bps and you have 18+ months remaining, breaking and re-locking usually wins.

Is a no-penalty CD a good hedge in a rising-rate cycle?

Yes, in concept. A no-penalty CD lets you exit at any time without surrender cost, so you can lock a rate and bail if rates climb higher. The catch: no-penalty CDs typically pay 30-80 bps below standard CDs, so the option costs you yield. Only useful if you genuinely need certainty for a specific event.

Should I use Treasury bills instead of a HYSA in a hike cycle?

T-bills (4-, 8-, 13-, 26-, 52-week) are an excellent rising-rate instrument because they roll over at the new yield each maturity. State-income-tax-free, which is a real advantage in CA, NY, OR, and other high-tax states. Yield is usually within 10-30 bps of top HYSAs.

Does the Fed actually control HYSA rates?

Indirectly. Banks price HYSAs off short-term funding costs, which are anchored to the Fed funds rate. When the Fed raises, bank funding costs rise, and banks raise HYSA yields to compete for deposits. The pass-through ratio is the bank's choice.

Is a brokered CD better than a bank CD in a hike cycle?

Brokered CDs have a secondary market, so you can sell before maturity at the prevailing market price. That gives you partial exit liquidity that a bank CD does not. In a hike cycle, selling a brokered CD before maturity means selling at a discount, which is a loss; bank CD early-withdrawal penalty is often cheaper. Brokered CDs make more sense in falling-rate environments where you can sell at a premium.

Want help reading the rate cycle for your specific situation?

I'm a licensed independent producer (NPN 20602398) appointed with multiple A-rated carriers. I'll walk you through whether to stay in HYSA, ladder into CDs, or lock a MYGA based on the current Fed posture and your horizon.

No cost, no obligation. Written second opinion within 24 hours.

Hans Goldstein · 213-414-2808 · NPN 20602398, independent licensed producer

By submitting, you agree to receive calls and texts from Hans Goldstein. Msg/data rates apply. Reply STOP to opt out. Privacy Policy.

Disclosure

This article reflects publicly available HYSA, CD, and annuity rate information approximate to the date above. High-yield savings rates are variable and change frequently — often weekly. Always confirm current rates directly with the institution before opening or transferring. This is general educational content, not a personalized recommendation, solicitation, or offer of any specific product. Hans Goldstein is an independent licensed insurance producer (NPN 20602398) appointed with multiple A-rated carriers in the fixed-annuity market; Goldstein & Co. LLC is not a bank, broker-dealer, or registered investment adviser. HYSAs and CDs are deposit products of FDIC-insured banks or NCUA-insured credit unions; MYGAs and other annuities are insurance contracts backed by the issuing carrier and state guaranty associations. FDIC and NCUA insurance limits are typically $250,000 per depositor per institution per ownership category. Tax discussion reflects federal law as of 2026 and is subject to change; consult a tax professional for your situation.