What will a 4% CD interest rate earn in 10 years?
It's likely that you've felt the pinch of today's high interest rate environment if you have credit card debt or you've recently purchased a home or car. Today's high rates are the result of multiple federal funds rate hikes that took place over the last couple of years in response to pandemic-era inflation. Though the Federal Reserve paused rate hikes in late 2023, borrowers are still feeling the pressure of a 23-year record high benchmark rate.
But there's a silver lining to high interest rates - especially for savers. The federal funds rate plays a role in the rates you pay to borrow money and the returns banks pay you to deposit it. So, interest rates on deposit accounts, like certificates of deposit (CDs), can be hard to ignore in today's high interest rate environment.
With interest rates expected to cool later this year, now may be the time to lock in high deposit account returns for the long-haul with a 10-year CD. But how much money will you earn if you do? That's what we'll break down below.
Compare some of today's best CD rates.
What will a 4% CD interest rate earn in 10 years?
The amount of money you earn on your 10-year CD depends on the interest rate you lock in when you open your account and the amount of money you deposit. Some of the best 10-year CDs, offer rates as high as 4%. But what does that equate to in terms of cash earnings over 10 years? Here's what you can expect to earn on a 10-year CD with a 4% interest rate, based on different deposit amounts:
- $1,000: You would earn $480.24 for a total of $1,480.24 after 10 years.
- $2,500: You would earn $1,200.61 for a total of $3,700.61 after 10 years.
- $5,000: You would earn $2,401.22 for a total of $7,401.22 after 10 years.
- $10,000: You would earn $4,802.44 for a total of $14,802.44 after 10 years.
- $15,000: You would earn $7,203.66 for a total of $22,203.66 after 10 years.
- $20,000: You would earn $9,604.89 for a total of $29,604.89 after 10 years.
- $25,000: You would earn $12,006.11 for a total of $37,006.11 after 10 years.
Open a CD now and start earning today.
Why it makes sense to open a 10-year CD right now
High returns aren't the only reason it may be a good idea to open a 10-year CD right now. Find more reasons to do so below.
Rates could fall ahead
The federal funds rate - the benchmark rate for consumer borrowing and deposit accounts - is frozen at a 23-year high. But that rate could thaw soon. In fact, economists expect that the Federal Reserve could start to reduce its benchmark interest rate within the next few months. When the central bank reduces its rate, returns on deposit accounts are likely to follow.
But when you open a CD, you lock in the return on the account for its entire term. So, if you open a 10-year CD now, you're guaranteed today's high rate of return for the next decade - regardless of what the Federal Reserve decides to do.
CDs are safe
Most CDs come with FDIC deposit insurance on balances up to $250,000. With this insurance in place, the financial institution you open your CD with could go out of business and you would still be able to recover your money. So, CDs are a safe investment option.
CDs offer predictable returns
There's quite a bit of uncertainty in the economy and financial markets at the moment. CDs are a compelling way to offset that uncertainty in your portfolio. These accounts provide a fixed rate of return to maturity. That means, if you open a CD today, you'll know exactly how much money you'll earn over time. So, your returns are immune to the ebbs and flows of financial markets and the macroeconomic climate.
Tap into predictable returns with a CD now.
The bottom line
You could earn anywhere from a few hundred to several thousand dollars by investing in a 10-year CD. That depends on how much money you invest and the rate of return you earn. Moreover, with the prospect of rate cuts high, now may be the right time to do so. Compare today's leading CD offers and lock in your rate now.
