How much money can a 1-year CD make?


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Your return on a 1-year CD depends on the amount of money you deposit and your APY. 

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After the Federal Reserve’s 11 rate hikes over the past two years, it may be time to open a certificate of deposit (CD). Because the federal funds rate forms the foundation for CD rates, these accounts are now offering impressive APYs. But those high rates won’t last forever

“After a series of consecutive rate hikes, the Federal Reserve is expected to lower interest rates over the next several years,” says Gina McKague, founder and CEO at Mckague Financial. “Right now is a great time to invest in fixed products that offer guaranteed interest rates over an extended period of time.”

If you aren’t ready to lock your money away in a long-term CD, though, it can make sense to consider a 1-year CD. But how much money can you earn with one of these accounts?

Open a 1-year CD today to start earning big returns. 

How much money can a 1-year CD make?

The amount of money you can earn with a 1-year CD largely depends on two factors: 

  1. The amount of money you deposit into the account: CDs offer returns by paying you a percentage of your balance in exchange for keeping your money in the account for an agreed-upon term. For example, a CD with a 4.5% APY pays $4.50 for every $100 you have in the account per year. 
  2. The APY the CD offers: Financial institutions can offer whatever APYs they’d like on their CDs. So, it’s important to compare your options to find the highest possible rate. 

But how much money can you make with a 1-year CD in terms of dollars and cents? Some of today’s top-paying 1-year CDs are available at CIBC Bank USA, Popular Direct and Limelight Bank with rates ranging from 5.66% to 5.75% (rates current as of December 7, 2023). 

Here’s what that means in terms of returns based on varying balances: 

  • $5,000 at 5.66%: $283 (for a total of $5,283 after one year)
  • $5,000 at 5.75%: $287.50 (for a total of $5,287.50 after one year)
  • $10,000 at 5.66%: $566 (for a total of $10,566 after one year)
  • $10,000 at 5.75%: $575 (for a total of $10,575 after one year)
  • $25,000 at 5.66%: $1,415 (for a total of $26,415 after one year)
  • $25,000 at 5.75%: $1,437.50 (for a total of $26,437.50 after one year)
  • $50,000 at 5.66%: $2,830 (for a total of $52,830 after one year)
  • $50,000 at 5.75%: $2,875 (for a total of $52,875 after one year)

Lock in today’s high APYs by opening a CD now. 

Other reasons to consider opening a 1-year CD

Impressive returns aren’t the only reason you may want to consider opening a 1-year CD. Other reasons to open one include: 

CDs are safe

CDs aren’t susceptible to the ebbs and flows of the market. So, regardless of the state of the market or the economy, you won’t lose money. Adding to the safety of CDs, these accounts are typically FDIC- or NCUA-insured for up to $250,000 per depositor, per account. With this insurance, the bank can go out of business and your money will still be safe. 

CDs offer predictable returns

When you open a 1-year CD, you’ll receive the guaranteed rate of return for the full CD term. In turn, you can use your CD’s APY to determine how much money you’ll make over the life of the account. To do so, multiply your deposit amount by your APY, but be sure to convert your APY to a decimal first. For example, a 5% APY is 0.05 as a decimal. The result of this equation tells you how much money your CD will make in a year.  There are also numerous online calculators that you can use to determine the potential returns on your CD. 

You can use a CD to lock in today’s high interest rates

The interest rate environment is a cyclical one. There are low interest rate cycles and high interest rate cycles. At the moment, we are in the middle of a high interest rate cycle — but those high rates won’t last forever

CDs allow you to lock in today’s interest rates for the entire term of the account. So, when you open a 1-year CD, you can rest assured that you’ll be paid today’s high rates for the entire 1-year term of your CD — even if interest rates fall between now and then. 

Explore the rates you could get on a CD today. 

The bottom line

The bottom line is that the amount of money you can make with a 1-year CD depends on how much money you plan to deposit in the account and how much interest you earn. If you want to earn the highest return possible, compare your options to find the highest interest rate and deposit as much money as you can into your CD. 



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