Here's how much you could make by depositing $5,000 into a CD
When it comes to your savings, you can never have too much. Whether you're building an emergency fund or putting aside money for a large purchase, every dollar (and cent) counts. And one easy way to add more dollars and cents to your balance is with a certificate of deposit (CD)
CDs are a safe, simple way to grow your savings. You agree to keep your money in the account for a specific period — known as the term — and the bank pays you interest in exchange. Your interest rate is locked in when you open the CD, so even if rates go down, you'll keep the same rate for the life of the CD. (That means today's high rate environment is a great time to open a CD!)
How much can you earn? Let's take a look.
Compare today's top CD rates online now.
How much you could make by depositing $5,000 into a CD
Your potential CD earnings depend on the CD's interest rate and term. Today's top CDs feature APYs up to 5.6%.
At a solid 5% APY, here's how much a $5,000 CD would be worth at varying term lengths:
- 1-month CD: $5,020.37
- 3-month CD: $5,061.36
- 6-month CD: $5,123.48
- 1-year CD: $5,250.00
- 5-year CD: $6,381.41
We used the same APY above to give you a straightforward visual comparison. However, interest rates vary from term to term, with longer terms typically offering higher rates than short ones.
So, for a more accurate idea of how much you could earn today, here's what your $5,000 would be worth in some of the top CDs available now for each term:
- Zions Bank (1 month, 0.30% APY): $5,001.25
- America First Federal Credit Union (3 months, 4.50% APY): $5,055.32
- Bank5 Connect (6 months, 5.30% APY): $5,130.79
- CIBC Bank USA (1 year, 5.36% APY): $5,268.00
- First Internet Bank of Indiana (5 years, 4.59% APY): $6,257.79
Banks and credit unions offer a wide range of CD rates, so take the time to shop around and compare current offerings to ensure you're earning as much as possible.
Other things to keep in mind
The interest rate is the biggest factor affecting how much you can earn with a CD. But there are other important things to consider as well:
- Compounding frequency: Different CDs calculate compound interest at different intervals (typically daily or monthly). The more frequently interest compounds, the more you earn over the CD's term.
- Early withdrawal penalties: Most CDs penalize you for taking out money before the term ends. This penalty can be anywhere from a month to a full year worth of interest. If you think you'll need your funds sooner than later, opt for a shorter term or a no-penalty CD.
- Minimum deposit requirements: Some of the highest APYs come with CDs that require hefty deposits (as high as $25,000 or more). If you can't meet that minimum, you can still get a high rate — just maybe not the highest. All of the CDs listed above require a deposit of $5,000 or less.
Find out how much you could earn by viewing today's top CD rates here.
The bottom line
While your money is lying in wait, it might as well be earning interest for you. And a CD can be a great way to enable it to do just that.
When you deposit $5,000 into one of today's top CDs, you could earn hundreds of dollars in interest or more, depending on the rate and term. All you have to do is open the account, deposit your money, then sit back and watch it grow.
Also, bear in mind that a CD is just one savings product of many. You may also want to look into high-yield savings accounts, which offer competitively high rates but give you more flexible access to your funds. In fact, there's no reason you can't open both to really take your savings to the next level.
