How much will a $15,000 CD make in a year?
As inflation drives prices up, and the Federal Reserve tries to combat it with higher interest rates, a positive environment is emerging for savers. Today's interest rates on savings vehicles, like certificates of deposit (CDs), are higher than we've seen in decades.
But high rates don't last forever.
Interest rates are cyclical, meaning there are high and low interest rate cycles. So, it can be a smart move to lock in savings rates while interest rates are high with a CD. In doing so, you can offset inflation-related pains while putting your money to work for you.
Open a CD now to lock in today's high interest rates.
How much will a $15,000 CD make in a year?
The return you'll generate on a $15,000 CD in a year largely depends on the rate you get when opening the account. Keep in mind that online banks don't have the same overhead expenses as their brick-and-mortar counterparts. This typically gives online options the ability to offer more competitive rates.
If you're in the market for a CD, be sure to consider online banks as you compare your options.
So, how much would a $15,000 CD make in a year? Here's what you can expect depending on the interest rate you lock in:
- At 6.00%: $900 (for a total of $15,900 after one year)
- At 5.75%: $$862.50 (for a total of $15,862.50 after one year)
- At 5.50%: $825 (for a total of $15,825 after one year)
- At 5.00%: $750 (for a total of $15,750 after one year)
You don't have to have $15,000 to make opening a CD worth it, though. For example, if you only have $5,000 available to deposit, here's what your returns would look like:
- At 6.00%: $300 (for a total of $5,300 after one year)
- At 5.75%: $287.50 (for a total of $5,287.50 after one year)
- At 5.50%: $275 (for a total of $5,275 after one year)
- At 5.00%: $250 (for a total of $5,250 after one year)
Open a CD today to put your savings on overdrive.
Other reasons to open a CD
CDs can offer impressive returns, but that's not the only reason to open one. Other reasons include:
- Lock in high rates: The Federal Reserve has raised its target federal funds rate several times over the past couple of years. As a result, CDs are offering higher returns than we've seen in years. When you open one, you lock in the rate for the full CD term.
- No monthly maintenance fees: Some deposit accounts can come with monthly maintenance fees, but these fees aren't common on CD accounts.
- Safety: CDs are FDIC-insured deposit accounts, making them a safe option. If the bank you open the CD with goes out of business, you'll get your money back (up to the FDIC limits).
There's a trade-off for being able to lock in today's high interest rates with a CD, however. When you open a CD, you agree to leave the money in the account for a certain term. So, if you choose to open a 1-year CD and need to access the funds before your money matures, you may have to pay a penalty.
Put your money to work with a CD now.
The bottom line
In today's high-interest rate environment, CDs offer a compelling way to grow your savings. And, the fact that they're FDIC-insured makes them a safe play. If you're looking for a secure way to save while earning a compelling return, consider opening a CD today.
