No matter where you put your money, the return on your investment is always one of the key considerations. This is true for 0.45% each year.and stocks and bonds. But it's also true for savings vehicles like and accounts. You don't want to invest your money into something that will produce minimal or negligible returns, like regular savings accounts, with most currently earning just
Fortunately, now is a great time to open a high-yield savings account or CD.on the latter account type are now the highest they've been in years, giving savers a rare opportunity to grow and protect their money in today's inflationary environment. That said, it helps to know exactly what your returns will look like before signing on the dotted line.
How much does a $10,000 CD make in a year?
The more you invest in a CD, the more money you'll make, regardless of the rate environment. However, rates on CDs vary significantly based on the bank and lending institution. For example, you'll almost always get a better rate with anthan you would with one with physical locations (the savings the bank keeps by not having to maintain a physical branch are often passed on to accountholders in the form of higher rates). With that understanding, here's how much you can expect a $10,000 CD to make in a year, based on a few popular CD rates available today:
- At 6.00%: $600 (for a total of $10,600 after one year)
- At 5.75%: $575 (for a total of $10,575 after one year)
- At 5.50%: $550 (for a total of $10,550 after one year)
While those amounts are substantive, the CD total after a year could be even higher when takinginto account. How often your interest is compounded (most are either quarterly or annually) will depend on the account type and provider. But don't be afraid to ask about it when shopping for CDs so that you can more accurately budget for a final number once your term has expired.
Other CD benefits to know
While the elevated interest rate is the major selling point for CDs today, it's not the only benefit of these accounts. Here are two others to know:
- Rates are locked: Interest rates on CDs are locked for the full . So, if you open a with a 5.75% interest rate today — and rates drop to 5% in six months — you'll still earn that higher rate for the full CD term. That's a big plus in today's inflationary environment and will inject some much-needed predictability into your budget.
- CDs are safe: There was some concern earlier this year about the safety of money kept in banks after . But to store your money as they're FDIC-insured up to $250,000 per account, per bank. So you won't have to worry about any bank failures if you opt for this account type.
The bottom line
There aren't many sure bets in today's economy, but CDs are one of them. Bynow, you can make hundreds of dollars more on your savings. Compared to the $45 you'd earn with a regular savings account, it's a no-brainer to move that money into a CD account now. Plus, rates are locked, meaning you'll still earn money at today's elevated rate even if the rate environment changes — and you'll be protected with FDIC insurance up to $250,000 per account and bank.
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