How much interest will a $10,000 5-year CD earn right now?
Summary
Putting $10,000 into a 5-year certificate of deposit (CD) now can earn over $2,000 in interest by the end of the term due to fixed higher rates. However, this money cannot be accessed easily without penalties until the CD matures, while high-yield savings accounts offer easier access with slightly lower, but flexible, interest rates.Key Facts
- A 5-year CD lets you lock in a fixed interest rate for the full five years.
- At current rates between 4.20% and 4.35%, a $10,000 deposit could earn roughly $2,280 to $2,370 in interest over five years.
- The total amount after five years would be approximately $12,280 to $12,370.
- Early withdrawal from a 5-year CD usually results in a penalty, meaning money is not easy to access before maturity.
- High-yield savings accounts offer variable rates around 4.00% to 4.10%, giving about $2,160 to $2,225 in interest over five years.
- Unlike CDs, savings accounts let you withdraw money any time without penalty.
- The Federal Reserve has kept its key interest rate steady recently but may increase it, affecting future CD rates.
- Banks may lower CD rates in advance if the Fed cuts rates later, which could make locking in a higher long-term rate now more attractive.
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