Certificates of Deposit | FRED (2024)

FAQs

How much does $10,000 in CDs make in a year? ›

CD interest is usually compounded daily or monthly. Our CD interest calculator is compounded monthly to account for your extra savings. Here's a simplified breakdown of monthly compounding considering a principal deposit of $10,000 and a 4% APY: Month 1: Interest earned = $10,000 (principal) x (4% APY / 12) = $33.33.

With a $10,000 investment in a top-paying CD, you can earn hundreds to thousands of dollars of interest on your money—and much more than if you keep it in a typical savings account. CDs can also help you keep your money in savings, reducing the temptation of spending on unplanned purchases.

This CD will earn $117.15 on $500 over five years, which means your deposit will grow by 23.4%.

In summary, a certificate of deposit gives you steady and safe returns. Investing $15,000 in a CD could lead to substantial gains, regardless of the CD's length. However, make sure you won't need that money while the CD is active because withdrawing early usually incurs hefty penalties.

Key takeaways. Interest earned on CDs is considered taxable income by the IRS, regardless of whether the money is received in cash or reinvested. Interest earned on CDs with terms longer than one year must be reported and taxed every year, even if the CD cannot be cashed in until maturity.

There's no limit on the number of CDs you can have, and it's possible to have multiple CDs at the same bank or different financial institutions. Whether it's appropriate for you to have more than one CD depends on your financial goals and needs.

While CDs can provide some guaranteed returns over time and some level of security, they're not likely to provide you the returns needed to build wealth for retirement over time. Instead, it might make more sense to build wealth with other assets and only use CDs for a portion of your portfolio.

Are CDs safe if the market crashes? Putting your money in a CD doesn't involve putting your money in the stock market. Instead, it's in a financial institution, like a bank or credit union. So, in the event of a market crash, your CD account will not be impacted or lose value.

Why is my CD losing money? ›

Inflation erodes the purchasing power of your money over time, and if your CD's interest rate isn't keeping up with inflation, you're essentially losing money. For example, if your CD earns a 2% annualized return but inflation is running at 3%, you're actually losing 1% of your purchasing power every year.

When you sign up for a CD, you agree not to touch the money for a set period of time but there are always unexpected expenses. If you access your money before the CD's term is up, you'll be charged an early withdrawal penalty, often worth a few months of interest.

Right now, the average interest rate for a 5-year CD is 1.46%. If you put $10,000 into a CD with that rate right now, after five years you'd have earned $751.63, for a total of $10,751.63. As noted above, though, you can likely get a much better interest rate if you shop around and find a CD from an online bank.

1-year CD returns on $100,000

At 4.5%: $4,500, for in a total balance of $104,500 at the end of the term. At 5.0%: $5,000, for in a total balance of $105,000 at the end of the term.

Terms may apply to offers listed on this page. APY = Annual Percentage Yield. APYs are subject to change at any time without notice. A $20,000 initial deposit in a CD could yield between $260 and $4,700, with longer terms paying out significantly more.

According to data from the FDIC, the average savings account earns 0.45% APY. Currently, however, the best high-yield savings accounts offer APYs of around 5.00%. If you deposit $10,000 into one of these high-yield savings accounts, you'll earn $500 in interest in a year.

Depending on the bank, a $5,000 CD deposit will make around $25 to $275 in interest after one year.