Core Insights - The best financial decision for holiday bonuses depends on the interest rates of student loans compared to high-yield savings accounts or CDs [1][4][9] Student Loans - Interest rates for undergraduate student loans taken out between mid-2006 and 2025 range from 2.75% to 6.8%, while rates for graduate students and other borrowers are typically higher [3] - If student loan interest rates exceed 5%, using bonuses to pay down loans is financially beneficial [4] Savings Accounts and CDs - As of December 17, 2025, the top rate for a one-year CD is 4.3%, and the best APY for a high-yield savings account is 5% [3] - High-yield savings accounts offer more flexibility for withdrawals compared to CDs, which require funds to be locked in for a specified term [8] Emergency Funds - Building an emergency fund is crucial, especially for those who lack cash reserves, to avoid reliance on high-interest debt sources [5][9] - Many individuals have struggled to accumulate emergency savings this year, making it important to prioritize this aspect [7] Tax Implications - Interest earned from CDs or high-yield savings accounts is subject to income tax, while paying down student loans does not incur taxes [9] Payment Strategies - Extra payments on student loans can help reduce overall interest and accelerate repayment, but borrowers should ensure payments are applied to the principal balance [10][12] - For borrowers on income-driven repayment plans, unpaid interest can increase the principal balance, extending repayment time and total interest paid [11]