How much interest will a $25,000 2-year CD earn if opened this August?
Summary
Putting $25,000 into a 2-year certificate of deposit (CD) opened in August could earn between about $2,092 and $2,196 in interest, depending on the bank’s rate. These CDs offer fixed rates around 4.1% to 4.3% APY, which are much higher than the average savings account rate of 0.38%.Key Facts
- Inflation has slowed slightly to 3.5% in June from 4.2% in May.
- The Federal Reserve is unlikely to cut interest rates soon until inflation is clearly under control.
- 2-year CDs currently offer annual percentage yields (APY) from about 4.10% to 4.30%.
- A $25,000 deposit in a 2-year CD at 4.30% APY would earn approximately $2,196 in interest after two years.
- The interest earned differs by around $104 between the highest and lowest CD rates offered.
- The rate on a CD does not change during the term, even if Fed rates move up or down.
- The average savings account rate is about 0.38% APY, which would earn roughly $190 in interest on $25,000 over two years.
- High-yield savings accounts offer rates closer to CDs but are variable and can be lowered by banks.
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