Certificates of deposit (CDs) aren’t the best option for many people’s savings. There are a few good things about CDs, such as fixed interest and FDIC insurance. But CDs also have a few major drawbacks; The biggest one is early withdrawal penalties.

If you are forced to withdraw money from the CD early, you will have to pay penalties that can wipe out most (or all) of the interest you were hoping to earn. Even though CDs are 4.00% APY or higher, they don’t fit many people’s financial goals because they aren’t very flexible.

Even though APYs are higher than savings accounts, there are a few signs that you should skip CDs.

1. You don’t have a solid emergency fund

CDs are not a good place to stash money you might need tomorrow, so don’t use CDs for your emergency savings. Unless you already have several months’ income in an emergency fund — which most Americans don’t — you shouldn’t open a CD.

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If you’re still building your emergency fund or don’t want to commit to a CD term even if you have a lot of non-emergency cash, open a high-yield savings account instead. Check out our list of the best savings accounts those that offer high APYs.

High-yield savings accounts offer an easy way to grow your cash reserves faster and allow you to control when and how you use your money without penalty.

2. You save for a short-term goal

Another big problem with CDs is that they are not the best way to grow your money if you are saving for a specific short-term financial goal. How soon will you need the money to put in the CD? Ask yourself if you are saving for the following purposes:

• Vacation after six months
• wedding in one year
• A new car in two years
• Down payment on a house in three years

Opening a CD for a short-term goal isn’t always the best way to save because your plans may change. You may want to avoid CDs unless you know exactly when you’ll need your money; they are too inflexible to the reality of many people’s financial lives.

What if you find your dream home sooner than you expected, but you can’t get cash from your 3-year CD without paying early withdrawal penalties? What if your car breaks down and you need to replace it now rather than in two years?

For many short-term financial goals, it’s better to keep your money in a high-yield savings account (or money market account). Even if your savings account earns a slightly lower APY than you would with a CD, the flexibility and peace of mind are worth it.

3. You save for a long-term goal

CDs are not the best place to keep money you may need now or soon. But what about long-term money you’ll need later?

Here’s another problem with CDs: If you can afford to lock your money in a long-term CD (like three years or five years), you may want to put that money in a brokerage account instead.

If your investment timeline is longer than three years and you’re willing to accept some investment risk, a relatively low-yield CD isn’t the best place to keep your money. You can potentially earn higher returns by investing this money in a diversified portfolio of stock and bond ETFs, money market funds, and other investments.

4. You don’t have tens of thousands of dollars to spare.

After all, the best reason to open a CD is if you have plenty of money and don’t need it to save for retirement or invest in long-term goals. For example, CDs may be right for retirees who have large amounts of cash because they need safe, stable fixed income.

But the typical American only has around $8,000 in cash in the bank, including savings accounts and checking accounts. Let’s say your savings account pays 1% lower APY than a CD; This means that for every $1,000 saved, you earn $10 less per year. Is it worth locking your precious money in a CD to make an extra $10? For most people the answer is no.

In conclusion

Don’t worry about getting the highest possible return if it means you risk early withdrawal penalties. Instead, keep your money in a high-yield savings account, stay in control of your money, and continue to grow your savings.