Here’s how much you could make by depositing $1,000 into a CD

If you’re looking to grow your savings, investing in a certificate of deposit (CD) can be an easy way to do it. A CD is a type of savings account that enables you to earn interest on the money you deposit, often at higher rates than even high-yield savings accounts.

Better yet, when you open a CD, you lock in the interest rate for the duration of the CD’s term. That means that even if interest rates go down, you’ll enjoy that rate for the lifetime of the CD. And in today’s high rate environment, that can be especially profitable.

But just how much can you earn with a CD? To give you an idea, let’s take a look at your potential earnings if you have $1,000 to deposit.

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How much you could make by depositing $1,000 into a CD

How much you can earn by investing in a CD depends on the term length and interest rate. Today’s top CDs offer interest rates up to 5.38% APY.

For a strictly apples-to-apples comparison, here’s how much a $1,000 CD would be worth at varying term lengths, all at 5% APY:

• 1-month CD: $1,004.07
• 3-month CD: $1,012.27
• 6-month CD: $1,024.70
• 1-year CD: $1,050.00
• 5-year CD: $1,276.28

Of course, interest rates vary from CD to CD, and longer terms generally come with higher rates. For a more accurate picture of what you could earn with today’s CDs, here’s what your $1,000 would be worth if you deposited it in some of the top CDs currently available for each term:

• Zions Bank (1 month, 0.30% APY): $1,000.25
• BMO Alto (3 months, 5.25% APY): $1,012.87
• First Internet Bank of Indiana (6 months, 5.33% APY): $1,026.30
• BMO Alto (1 year, 5.25% APY): $1,052.50
• EFCU Financial (5 years, 4.75% APY): $1,261.16

CD rate can vary widely depending on the bank or credit union offering the account. Shopping around for the best rate can pay off in the long run, so be sure to check out multiple CD offerings before investing your money.

Other things to keep in mind

The interest rate is the biggest factor when it comes to how much you can earn with a CD, but it’s not the only thing you should consider. You’ll also want to bear in mind:

• Compounding frequency: CD accounts accrue compound interest at different frequencies, with the most common being daily or monthly. The more frequently interest is compounded, the more you’ll earn.
• Early withdrawal penalties: Many CDs charge a penalty for withdrawing money before the term expires. These penalties can chip away at your earnings. It’s best to choose a term that suits your financial needs and goals so you won’t incur these charges. You can also consider no-penalty CDs, although they usually have slightly lower rates.
• Minimum deposit requirements: Some high-paying CDs require substantial opening deposits (think $5,000 to $10,000). All of the CDs mentioned on this list require $1,000 or less.

Finally, it’s important to remember that a CD is one of many options for saving and investing money. You can also look into high-yield savings accounts, which provide similarly high rates but allow you to access your money more flexibly if needed.

Find out how much you could earn by viewing current CD rates here.

The bottom line

CDs are a great option for those who want to earn interest on their savings. Whether you’re building an emergency fund or saving for a specific expense like a car purchase, a CD can help you earn a little extra cash while keeping your money safe.

By depositing $1,000 into a CD with a competitive interest rate, you could earn anywhere from a few dollars to over $200 in interest over the course of several years. To find the right CD for you, take the time to compare several CD products and look for the highest-paying one with the terms that best fit your needs.