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How Much Can You Earn From a CD?

sarahsharkey
Sarah Sharkey Updated: October 3, 2023 • 2 min read
table of content

Table of Content
woman looking at her purse at all the money she is saving with cds

Key Points:

  • When you open a CD, you cannot touch the funds for the term without incurring a penalty.

  • CD rates vary widely, some are paying over 5%.

  • Shopping around can help you lock in the top CD rates.

Certificates of deposit (CDs) are on the rise. As CD rates rise, stashing your cash into this savings product might be tempting. Before you decide to wade into the CD market, or not, it’s helpful to estimate how much you could earn from a CD.

Let’s explore how much you could earn from a CD and if this product is the right fit for your portfolio.

If you want to add a CD to your portfolio, finding the most attractive CD rates can make all the difference.

How Much Can You Really Earn From a CD?

The amount you can earn from a CD varies based on the term and rate. If you find a long-term CD with a relatively high rate, you stand to earn the most interest on your funds.

Below is a look at how much you could earn from CDs at a variety of term lengths and the current average APYs.

CD Term APY Deposit Amount Interest Earned Over Term
6 months 1.36% $1,000 $6.78
12 months 1.76% $1,000 $17.60
24 months 1.51% $1,000 $30.43
36 months 1.38% $1,000 $41.97
48 months 1.31% $1,000 $53.44
60 months 1.38% $1,000 $70.93

 

The good news is that many financial institutions offer CD rates above the national average. If you are willing to shop around, you might find a higher rate. That higher rate can translate into earnings.

CD Term APY Deposit Amount Interest Earned Over Term
6 months 5.35% $1,000 $26.40
12 months 5.30% $1,000 $53.00
24 months 4.80% $1,000 $98.30
36 months 4.75% $1,000 $149.38
48 months 4.50% $1,000 $192.52
60 months 4.60% $1,000 $252.16

 

As you can see, the amount you can earn with a CD varies based on the APY and term length. But a higher APY and longer term can lead to higher interest earnings.

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Benefits of CDs

CDs are an option for savers and investors looking to grow their funds. Below is a closer look at some of the benefits of CDs:

  • Higher rates available: The Federal Reserve has been pushing the federal funds rate higher in an effort to combat inflation. As of October 2023, this push has led some CDs to have rates above 5%.
  • Predictability: When you open a CD, you will know exactly how much you will earn in interest over the term. The stability of a CD makes it a safe haven for many savers.

CDs Related Articles

The Bottom Line

If you want to add a CD to your portfolio, finding the most attractive CD rates can make all the difference. A higher rate could lead to hundreds of extra dollars in your account.

Luckily, it’s easy to find high CD rates. You can start your search with Lendstart to compare CD rates across multiple financial institutions.

sarahsharkey
Written by Sarah Sharkey linkedin-icon

Sarah Sharkey is a personal finance writer with a Master's in Management from the Hough School of Business at the University of Florida. She enjoys helping people make better financial decisions and has written for numerous personal finance publications, including Money Under 30, Business Insider, and The College Investor. Sarah enjoys traveling, hiking, and reading when she is not writing.