How much interest would a $10,000 18-month CD earn now?
If you were searching for a smart way to grow and protect your money in recent years, you had no shortage of options to explore. From money markets to high-yield savings and certificate of deposit (CD) accounts, lenders have been offering exponentially higher interest rates than they had just a few years ago. These accounts are also safe, both federally insured and immune from the risks that stocks, bonds and other volatile investments present.
CDs, in particular, offer a unique opportunity for savers, both in the last two years and in what now appears to be a changing rate climate. Rates on these accounts are high currently (with some approaching 6% right now) and those rates are locked (so your return will remain the same even if the economy changes during the account term).
However, it's helpful to crunch the numbers in advance to determine the exact worth of a prospective CD account. With rates that are high now but subject to change in the upcoming months, it makes sense to lock in a long-term, 18-month CD rate now. Below, we'll break down exactly how much interest you could earn by opening this account today.
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How much interest would a $10,000 18-month CD earn now?
While the best 18-month CD rates aren't quite as high as what can be secured with some short-term CDs, they're still competitive (and locked, unlike high-yield savings account rates which are variable). Here's what you can expect to earn with a $10,000 18-month CD now, calculated with some readily available rates for this account term:
- 5.00%: $759.30 for a total of $10,759.30 after 18 months.
- 4.75%: $720.90 for a total of $10,720.90 after 18 months
- 4.50%: $682.54 for a total of $10,682.54 after 18 months
While these rates are accessible now, particularly if you open an account with an online bank, you should shop around before locking your money away. If you don't, you could find an account with a higher rate in the future and be forced to pay an early withdrawal penalty to regain access to your funds.
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Why an 18-month CD could be best for you now
The high rates that CDs come with are in exchange for leaving your money in the account untouched for the full term. But in today's unique climate, in which expenses are still elevated and inflation is still problematic, it can be difficult for savers to part with their money long-term.
An 18-month CD provides an attractive alternative, as the funds won't be locked away as long as 2-year, 3-year and 5-year CD accounts, but the rate will still be as competitive or even higher than those counterparts. Plus, by opening an 18-month CD before this August, savers can lock in a high rate before they drop when the Federal Reserve cuts interest rates in September, as is widely expected to happen. Just be sure to only deposit an amount that you can afford to leave in the account until it matures or the hundreds of dollars you earn could be depleted with an early withdrawal penalty.
The bottom line
An 18-month CD offers savers an appealing combination of a high rate and more flexibility than their long-term counterparts. And by acting now, savers can lock in an elevated rate before they start dropping in the months and years to come. By doing so with a $10,000 deposit, they could boost their savings by $680 or more, making this a smart and effective way for savers to boost their financial health now.
