In today’s economic climate, finding reliable ways to grow savings can be challenging. However, certificate of deposit (CD) accounts offer a fixed interest rate guarantee, making them an attractive option for those seeking predictable returns. With rates ranging from 4% to 5%, savers have opportunities to earn hundreds of dollars on their money.
To determine the potential earnings with a CD account, three key factors come into play: the interest rate, term length, and initial deposit amount. Using readily available rates and terms, here are some scenarios for earning $500 with a CD:
* Deposit $23,000 into a 6-month CD with a 4.55% rate, resulting in approximately $520 earned by July.
* Deposit $15,500 into a 9-month CD with a 4.40% rate, yielding around $509 returned upon maturity.
* Deposit $12,000 into a 1-year CD with a 4.50% rate, earning about $540 by next January.
While CD rates have declined from their peak in January 2024, they remain a safe and reliable way to earn a good return on savings. Online banks often offer higher returns than traditional bank branches, but it’s essential to explore your options carefully and consider tax implications for the interest earned. By choosing the right lender and initial deposit amount, savers can take advantage of these opportunities to grow their money in 2025.
Source: https://www.cbsnews.com/news/how-to-earn-500-with-a-cd-in-2025