How much can you earn with a CD?

High interest rates Generally not seen as a good thing. But they do not only lead like negative High grocery prices. If you have interest bearing savings products, they imply higher savings rates.

One such product, a Certificate of Deposit (CD), is especially valuable in a high-interest-rate environment. dislike High Yield Savings Account, whose interest rate fluctuates based on the federal funds rate, CDs have a fixed rate. This rate is locked when the CD is opened, so Now open one Even if means you will enjoy a higher interest rate Inflation cools.

If you are considering getting a CD, this is important to know How it works And how much do you stand to earn with one. In this article, we’ll explore how your earnings can change based on various factors.

Explore your CD options now to see how much more you can earn

How much can you earn with a CD?

How much you earn from a CD depends on the bank (or credit union) with which you have the account, how much you put into the CD, and the term you choose. The more you deposit and the longer the tenure, the more interest you usually earn.

average CD interest rate Currently 4% to 5% (or higher) depending on the bank. That’s slightly better than high-yield savings account rates (currently around 3.5% to 4.5%) and significantly better than regular savings account rates (currently around 0.23%).

It’s also important to keep your funds in the CD until maturity. If you make a withdrawal before that time, you’ll not only reduce your CD balance (and the interest you’ll earn on it), but you’ll also pay a withdrawal penalty. CD terms typically range from three months to five years.

Check today’s CD rates to see what you can earn.

Examples of CD Income

To give you an idea of ​​your potential CD earnings, consider these examples calculated at a 4.5% interest rate:

$500 CD:

• Six months duration: $511.13
• One year term: $522.50
• Five year term: $623.09

$1,000 CD:

• Six months duration: $1,022.25
• One year duration: $1,045.00
• Five year term: $1,246.18

$5,000 CD:

• Six months duration: $5,111.26
• One year term: $5,225.00
• Five year term: $6,230.91

Start shopping for a CD by checking current rates here.

Bottom line

With interest rates high, now is a great time to open a CD. Because the CD rate is locked in when the account is opened, your CD rate won’t go down no matter what the Fed does with interest rates.

per Get the best CD rates If possible, take time to shop around, compare offers from different banks and calculate how much you can earn from different tenure lengths. Remember that it’s wise to split your savings between a CD and an A High Yield Savings Account So you have some liquid funds for emergencies.