According to the Federal Deposit Insurance Corporation (FDIC), the average rate for 12-month CDs as of 16 September 2024 was 1.88% APY. At this rate, a $100,000 CD would earn $1,880 in one year for an ending balance of $101,880.
While this might seem low, some institutions offer CDs with APYs of up to 5.50%. If you open a 12-month $100,000 CD at 5.50%, you’ll earn $5,500 for a total ending balance of $105,500. It pays to shop around and compare rates to find the best CD for you.
Earnings on a $100,000 one-year CD
| APY | Interest earned on $100K after one year | Total ending balance |
|---|---|---|
| 1.88% | $1,880 | $101,880 |
| 4.00% | $4,000 | $104,000 |
| 4.50% | $4,500 | $104,500 |
| 5.00% | $5,000 | $105,000 |
| 5.50% | $5,500 | $105,500 |
The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
A CD’s term is how long you must leave your money in the account without making any withdrawals. It can vary from a few months to several years.
Historically, banks and credit unions offered the highest rates for long-term CDs, such as two-year CDs. However, many financial institutions now offer high rates for CDs with terms of less than one year, such as six-month and three-month CDs.
Take a look at the potential earnings for $100,000 CDs with different terms using the average APYs from the FDIC.
Earnings on a $100,000 CD over different terms
| CD term | Average APY | Interest earned on $100K at maturity | Total ending balance |
|---|---|---|---|
| 1 month | 0.24% | $20.00 | $100,020.00 |
| 3 months | 1.55% | $387.50 | $100,387.50 |
| 6 months | 1.81% | $905.00 | $100,905.00 |
| 1 year | 1.88% | $1,880.00 | $101,880.00 |
| 2 years | 1.55% | $3,100.00 | $103,100.00 |
| 3 years | 1.43% | $4,290.00 | $104,290.00 |
| 4 years | 1.35% | $5,400.00 | $105,400.00 |
| 5 years | 1.42% | $7,100.00 | $107,100.00 |
The calculations shown are just a simple example and do not take into account compounding interest. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
When you’ve identified several high-yield CDs, compare the following factors before making your final decision.
The advertised interest rate for a CD is expressed as APY. A CD’s APY tells its earnings and accounts for compound interest. Unlike the interest for a traditional savings account, a CD’s rate is fixed, which means the APY expresses the earnings you will receive as long as you leave your money in the account for its term. If you make early withdrawals, you can expect to pay penalties, as discussed below.
A CD’s term can range from a few months to several years. Before you deposit $100,000 in a CD, you must be certain you won’t need to access the funds before the end of its term. When your CD matures, you can withdraw your principal and the earned interest without penalty.
FDIC-member banks and credit unions that are National Credit Union Administration (NCUA) members have insurance on all deposit accounts at their institutions for up to $250,000, including CDs.
Choosing a CD issued by an FDIC or NCUA-insured financial institution gives you additional peace of mind that your money will be safe even if the financial institution fails. By contrast, CDs offered by non-members of the FDIC or NCUA, such as brokerage firms, are not insured, exposing you to more risk.
If you experience a financial setback and withdraw your money before your CD matures, you’ll likely be forced to pay a significant penalty under the Truth in Savings Act (Regulation DD), which is found at 12 CFR 1030. The federal government establishes a minimum penalty for taking an early withdrawal from a CD of seven days’ simple interest.
While federal law sets a minimum penalty, it does not mandate a cap. This allows financial institutions to set significantly higher early withdrawal penalties, and most do. Withdrawing early from your CD could mean forfeiting 90 days of earned interest up to your entire earnings for the term.
Many financial institutions set minimum deposit requirements for CDs. While this might not be an issue if you have $100,000 to invest in a CD, it might be if you have less to spare. When you find a CD you like, check for a minimum balance requirement, and make sure you can afford to deposit that much without touching it for the term.
On the other hand, some financial institutions set maximum allowed deposits for high-yield CDs, which could affect you if you want to open a $100,000 CD. A maximum sets the total amount you can deposit in a CD.
You earn compound interest on a CD. This is the interest you earn on both the principal and the interest that you’ve already earned. A CD earns more when the financial institution compounds interest more frequently. A financial institution’s compounding frequency can be daily, monthly, quarterly or annually.
Investing $100,000 in a CD is not always the best option. Depending on your circumstances and financial goals, it might make more sense to choose an alternative.
High-yield savings accounts pay higher interest than traditional savings accounts but less than what you might earn with a high-yield CD. However, unlike a CD, a high-yield savings account won’t penalize you if you need to withdraw your money and doesn’t have a set term.
However, the interest rate for a high-yield savings account is variable. This means that if the Fed lowers the benchmark rate, as they have done recently, the financial institution offering the high-yield savings account will likely decrease the account’s APY. As a result, you won’t have guaranteed earnings like you would with a CD.
Most high-yield savings accounts are offered by online banks that can afford to pay higher interest because they have less overhead than brick-and-mortar banks. If you believe you will need access to your money before the CD matures, it may be better to opt for a high-yield savings account vs. a CD.
As with high-yield savings accounts, money market accounts also pay higher interest than traditional savings accounts, but they also have greater liquidity. Most money market accounts allow you to write checks or use a debit card to spend funds on deposits.
However, a money market account’s interest rate will be lower than those offered by high-yield CDs or many high-yield savings accounts, and the interest rate is variable. The FDIC reports the average money market APY was 0.64% as of 16 September 2024. A money market account is a good option for your emergency fund because you can access it in case of an unexpected job loss, illness or accident.
Bonds are another low-risk option for investing $100,000. These are debt securities sold by the U.S. Department of Treasury, the federal government, municipalities, and corporations.
Government-backed bonds are considered low risk even though they are not insured since the federal government typically pays its debts. Bonds issued by corporations can be much riskier because if a company files for bankruptcy or fails, its bonds can become worthless. This is why they are referred to as “junk bonds”.
Treasury bonds can be a good alternative to a CD for investing $100,000 if you want a low-risk investment and are saving for retirement. You can hold a Treasury bond until it matures or sell it before maturity. However, they come in terms of 20 or 30 years.
U.S. Savings Bonds are another option and include EE bonds and I bonds. While U.S. Savings Bonds allow you to cash in after 12 months, you’ll forfeit three months’ interest if you do. However, the current bond rates are lower than many high-yield CDs, so a CD might still be a better option.
Investing $100,000 in stocks is much riskier than depositing your funds in a CD, but it also potentially offers much greater returns. The average annual return on the S&P 500 over the last 100 years, adjusting for inflation, is around 7%. Actual yearly amounts might be significantly lower or higher.
If you can tolerate risk and have a long time to grow your money, investing in stocks can be a great way to build wealth. If you choose to, it’s critical to diversify your investment portfolio to reduce your risk rather than spending $100,000 on stock issued by a single company.
If you are nearing retirement and looking for safe, reliable investments with guaranteed returns, investing $100,000 in a CD is a better choice.
You can buy a $100,000 CD from a bank, credit union or brokerage. While you can likely buy a CD at your bank, you should look online to find CDs offering the highest rates and the terms you desire.
How much a $100,000 CD will earn depends on its APY and term. For example, $100,000 in a one-year CD with an average APY of 1.88% will earn $1,880 in interest.
However, CDs with higher interest rates are available, especially from online banks and credit unions. For example, $100,000 over 12 months in a 6% CD will earn $6,000.00 in interest.
How much a five-year $100,000 CD makes depends on its APY. For example, if you invest $100,000 in a five-year CD with an APY of 5.50%, it will earn $27,500 for a total ending balance of $127,500.00.
By contrast, if you invest $100,000 in a five-year CD that pays the FDIC average of 1.42%, you’ll earn $7,100.00 for a total ending balance of $107,100.00. Both of these examples do not take compounding interest into account.
How much a six-month $100,000 CD will make in six months depends on its APY. If it pays the average rate published by the FDIC of 1.88%, it will earn $940.00 in six months for an ending balance of $100,940.00. A CD paying an APY of 5.50% will pay $2,750.00 for an ending balance of $102,750.00 during the same time.
Whether it’s worthwhile to deposit $100,000 in a CD depends on your financial goals, risk tolerance and situation. If you have a low-risk tolerance and are getting close to retirement, a $100,000 CD can be a great way to protect your money while growing it.
However, a well-diversified investment portfolio of stocks and bonds might be a better idea if you are young.
Christy Montour is a seasoned finance writer with extensive experience in explaining a wide range of investment types, retirement accounts, and insurance products. With a background in taxation from law school, Christy possesses a deep knowledge of tax strategies and the tax code.
Christy has written thousands of blogs for clients on finance and investment topics. She covers a wide range of subjects, from the Offshore Voluntary Disclosure Program to IRS installment plans, offers-in-compromise, tax liens, levies, and criminal tax issues such as tax evasion and fraud. Christy’s expertise allows her to break down complex financial topics into clear, accessible content for her readers.
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