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Discover the Potential Earnings of Depositing $10,000 into a CD

Invest $10,000 in a CD for high annual percentage yields (APYs) and fixed interest rates, protecting earnings from future rate reductions due to declining APYs.

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Discover the Potential Earnings of Depositing $10,000 into a CD
Source: Bankrate

Discover the Potential Earnings of Depositing $10,000 into a CD: Currently, the most favorable certificates of deposit (CPDs) feature annual percentage yields (APYs) that surpass 5%. In addition, unlike variable-rate savings accounts, your CD has a fixed interest rate at the time of account opening. In light of the fact that APYs are declining, purchasing a CD now can protect your earnings from future rate reductions.

Therefore, how much can one currently earn by securing in a high CD rate? Despite the fact that the majority of individuals do not possess an additional $10,000 to invest, this round quantity makes it straightforward to estimate how much one could earn over time. In addition, we will provide guidance on how to increase your earnings through lesser deposits and offer suggestions for building your savings.

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How much can a $10,000 deposit into a CD yield?

The potential earnings is as follows: $10,000 deposited into a five-year CD, one-year CD, three-year CD, and six-month CD. We are calculating your return using the highest APYs presently offered for each CD term, as reported by the institutions that are part of the CNET database.

Term Top APY Bank Interest earnings CD value at maturity
6 months 5.35% Rising Bank $264.01 $10,264.01
1 year 5.35% NexBank $535.00 $10,535.00
3 years 4.66% First Internet Bank
of Indiana
$1,464.16 $11,464.16
5 years 4.55% First Internet Bank of Indiana $2,491.66 $12,491.66

Lacking the necessary $10,000? Absolutely not a problem. What can be earned with a reduced deposit amount?

A minimum balance of $10,000 is not a prerequisite for earning a competitive interest rate on savings. For the majority of the CD accounts on our list, securing a high CD rate does not require a minimum deposit. What could you potentially earn with additional deposit amounts?

Term Top APY $500 deposit $1,000 deposit $2,500 deposit $5,000 deposit
6 months 5.35% $13.20 $26.40 $66.00 $132.01
1 year 5.35% $26.75 $53.50 $133.75 $267.50
3 years 4.66% $73.21 $146.42 $366.04 $732.08
5 years 4.55% $124.58 $249.17 $622.92 $1,245.83

Method of CD interest computation

Upon opening a CD, the APY denotes the precise rate of return that the deposited amount will attain within a span of one year. Compound interest is reflected in the APY, which means that you earn interest not only on your initial deposit but also on your interest.

While some financial institutions apply daily compound interest, others do so on a monthly, quarterly, or semi-annual basis. You will earn more money as interest is compounded more frequently.

One may employ a compound interest calculator to ascertain the potential growth of their funds in a CD. We advise using this US Securities and Exchange Commission calculator.

Continue to accumulate savings? Helpful is a high-yield savings account.

CDs are an excellent choice if you have funds in your possession that you anticipate remaining inactive for a specified duration. However, the majority of us do not possess several thousand dollars that we are willing to forego for a few years in exchange for a fixed interest rate. And that is fine.

Whether you are accumulating funds for an emergency fund, pursuing savings objectives, or intend to withdraw funds as needed, a high-yield savings account or money market account that offers a competitive APY is your most favorable option. These accounts provide the flexibility to accumulate savings while retaining the ability to withdraw funds when necessary.

By contributing even $100 per month, one can accumulate savings of up to $1,200 annually. With a monthly contribution of $250, it is possible to accumulate an emergency fund worth $3,000 over the course of a year. Not to mention the interest that will accumulate on your savings as well. Despite the fact that savings account interest rates are variable, meaning they can fluctuate at the discretion of the bank and the economy at large, experts anticipate that they will remain elevated throughout the entire year. Some online high-yield savings accounts are currently offering returns of up to 5%.

A savings account requires time to grow. Concentrate on what you can contribute and develop the practice of saving so that it becomes second nature. Additionally, one may employ automated savings tools, such as round-ups and automatic transfers, to expedite the growth of their savings while minimizing time investment. Although many online banks also provide useful savings features, the automated savings features of Ally Bank are particularly favored by the editors of CNET Money.

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