How Much Will a $10,000 CD Earn?
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How Much Does a $10,000 CD Make in a Year?

  • Investing $10,000 into a certificate of deposit (CD) can yield hundreds of dollars in interest. The exact amount will depend on the term length and the annual percentage yield (APY).
  • If you invest $10,000 into a one-year CD with an average APY of 1.88%, you’ll earn $188 in interest over the term.
  • If you invest $10,000 into a one-year CD with a much higher APY of 6.00%, you’ll earn $600 in interest over the term.
  • CDs can be good investments if you want to earn higher interest than from an MMA or high-yield savings account, have a conservative risk tolerance, and will not need to access the funds before the CD matures.
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CONS

  • Must maintain a balance that would earn at least 1 cent if you want the interest to post to your account
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Our top picks for the best CDs

How much will a $10,000 CD earn in a year?

According to the FDIC, the average APY for a one-year CD is 1.88%. If you invest $10,000 into a one-year CD with a 1.88% APY, you’ll earn $188 at the end of the term.

However, many banks and credit unions offer CDs with much higher rates of up to 6.00%. If you invest $10,000 in one of these CDs, you’ll earn up to $600 in interest in a year.

You can compare the earnings on a $10,000 CD with a one-year term and different APYs in the table below.

Earnings on a $10,000 one-year CD

APY Interest earned annually on $10,000 Total ending balance
1.88% $188 $10,188
4.50% $450 $10,450
5.00% $500 $10,500
5.50% $550 $10,550
6.00% $600 $10,600

The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.

How much will a $10,000 CD earn over different terms?

CDs are available in a range of terms. The term is how long you agree to leave your money in the CD account in exchange for the interest.

Using the average APYs provided by the FDIC, you can see how a CD’s term can affect how much it will earn in the table below.

Earnings on a $10,000 CD over different terms

CD term length Average APY Interest earned on $10,000 at maturity Total ending balance
1 month 0.24% $2.00 $10,002.00
3 months 1.55% $38.53 $10,038.53
6 months 1.81% $90.09 $10,090.09
1 year 1.88% $188.00 $10,188.00
2 years 1.55% $312.40 $10,312.40
3 years 1.43% $435.16 $10,435.16
4 years 1.35% $551.03 $10,551.03
5 years 1.42% $730.45 $10,730.45

The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.

How does CD interest work?

CDs are offered by banks and credit unions. They have fixed terms from a few months to a few years. During the CD’s term, you agree you will not withdraw your money. Early withdrawals lead to penalties that amount to a substantial portion of any interest earned.

The bank or credit union offers a fixed interest rate payable over the agreed-upon term. This means that whether the prevailing interest rates go up or down during your CD’s term, you’ll receive the promised interest regardless of market fluctuations.

The interest earned by CDs is typically compound interest. This means the interest you earn will also earn interest as it compounds. The bank or credit union might compound interest each day, month, quarter or year. CDs that compound interest more frequently result in higher earnings.

Finally, CD rates vary significantly from one financial institution to another. You’ll need to shop around to find CDs with the best terms and APYs.

What factors impact how much I earn on a CD?

How much you’ll earn from a CD depends on multiple factors, including:

APY and interest rate

The APY offered by your CD has a large impact on how much you’ll earn. The annual percentage yield (APY) refers to how much interest you’ll earn from your deposit in a year, taking into account the effect of compounding interest. The interest rate the account doesn’t take into account is the effect of compounding and the rate at which interest is paid to you. Pay attention to both the interest rate and the APY when considering a CD.

CD laddering

One good way to take advantage of varying interest rates on CDs of different terms is to create a CD ladder. This involves splitting your $10,000 investment between CDs of different durations. For example, you might invest $2,500 each in CDs with three, six, 10 and 24-month terms.

As each of the shorter-term CDs matures, you can then invest that money in a new short-term CD. A CD ladder allows you to benefit from some of the introductory rates offered by banks for some short-term CDs while still enjoying the security offered by the long-term CD.

CD term length

Your CD’s term is how long you must leave your deposit in the account without withdrawals. As a result, with a long-term CD, you won’t have access to your money for a significant amount of time unless you’re willing to pay early withdrawal penalties. Because of this, you must be careful and think about your liquidity needs before you invest in a long-term CD.

Banks used to offer the highest rates for longer-term CDs. However, some financial institutions now offer higher rates on short-term CDs. Compare the rates offered by different CD products when you look at CDs with different term lengths.

Compounding frequency

The compounding frequency refers to how often the bank or financial institution compounds interest as it’s earned. Financial institutions may compound interest each day, month, quarter or year. In general, more frequent compounding means you will earn more during the CD’s term.

Early-withdrawal penalties

When you take out a CD, you agree with the financial institution that you will not withdraw your funds before the CD matures. If you do, you’ll face significant penalties reflected in your agreement’s terms.

Under federal law, the minimum penalty for withdrawing funds from a CD early is seven days of interest. However, banks can set their penalties at any amount equal to or greater than the federal threshold. Most assess early penalties of 60 days’ worth of interest on 12-month CDs and larger amounts for CDs with longer terms. Make sure you carefully review the CD agreement before signing and making a deposit.

Should I put $10,000 into a CD?

Investing $10,000 in a CD might be a good choice when interest rates are high if you anticipate market fluctuations may soon result in lower interest rates. It also can be a smart choice if you have a lower risk tolerance and want safe investments.

CDs pay fixed interest rates, which means you’ll know how much you’ll earn at the time you open your CD account. However, you will not have access to your money for the CD’s term, so if you anticipate you might need the funds sooner, you might want to consider an alternative.

Alternatives to CDs

Two alternatives to a CD that provide liquidity and easy access to funds include money market accounts and high-yield savings accounts.

Money market accounts

A money market account is a deposit account offered by banks and credit unions. It offers higher interest rates than a regular savings account.

With an MMA, you’ll also be able to make withdrawals with a debit card or check instead of having your money tied up for months. However, most banks limit the number of transactions you can make from a money market account each month.

An MMA is a better option to invest $10,000 if you think you might need to access your funds before a CD matures. You won’t face early withdrawal penalties when you complete transactions with your MMA. However, the interest rate for an MMA might be lower than what you could get with a CD.

High-yield savings accounts

High-yield savings accounts are available online and at some in-person banks. They offer much higher interest rates than traditional savings accounts and are often higher than those offered by MMAs.

A high-yield savings account provides better liquidity than a CD but not as much as an MMA. To access your funds, you’ll have to make in-person withdrawals or transfer funds from your online high-yield savings account to your checking account. The interest rates offered by high-yield savings accounts are typically close to those offered by CDs. You can learn more about how these types of accounts compare with our guide on CDs versus savings accounts.

How much does a $10,000 CD earn?

How much will a $10,000 CD make in one year?

How much a $10,000 CD will make in one year depends on the interest rate and compounding frequency offered by the bank or other financial institution. Other factors, including the term, CD laddering and whether you make early withdrawals, will also affect how much you earn from your CD investment.

For example, if you invest $10,000 in a CD with an APY offering the industry average of 1.88%, you’ll earn $188 on your investment in one year. If you instead invest $10,000 in a CD with an APY of 6.00%, you’ll earn $600 from your investment in one year.

What happens if you put $10,000 into a CD for five years?

According to the FDIC, 1.42% is the average APY for a five-year. At this rate, you would earn $730.45 in interest on a $10,000 CD with a term of five years. This would bring your total balance to $10,730.45.

If you get a five-year CD with a 6.00 APY, you would earn $3,382.26 in interest over the five-year term. This would bring your total balance to $13,382.26.

How much will a $5,000 CD make in one year?

The APY and term offered by the bank or financial institution will control how much a $5,000 CD will earn in one year. For example, if you invest in a CD with an APY of 1.88%, you’ll earn $94. If you invest $5,000 in a CD with an APY of 6.00%, you’ll earn $300.

How much will a $20,000 CD make in one year?

Using the average APY reported by the FDIC of 1.88%, a $20,000 CD will earn $376 in one year. If you invest the same funds in a CD offering a high rate of 6.00%, you’ll earn $1,200 in a year.

How much does a $100,000 CD make in a year?

How much $100,000 in a one-year CD makes will depend on the APY. The average APY for a 12-month CD is 1.88%, resulting in $1,880 of interest.

What are some benefits of CDs?

CDs offer the following benefits:

  • Generally safe and secure investment
  • May pay higher interest than a MMA or high-yield savings account
  • A fixed rate means you know how much you’ll earn
  • CD laddering takes advantage of fluctuating interest rates and increases liquidity

What are some downsides of CDs?

Some of the drawbacks of CDs include:

  • Early withdrawal penalties if you have to withdraw money before the maturity date
  • CD rates might not keep up with inflation during inflationary periods
  • Illiquidity as compared to checking, savings or MMAs
  • Much lower earnings potential than stock or bond investments

Is it worth getting a CD account?

Whether it’s worth getting a CD account depends on your financial goals and ability to tolerate risk. If you are saving for a short-term goal, such as a vacation planned for a year or more ahead, it can be a good choice. However, a CD is not a worthwhile investment if you know you’ll need to access the funds before the CD’s maturity date or to build an emergency fund. Other accounts, such as a high-yield savings or MMA, are better options for those purposes.

About the Author

Christy Montour
Christy Montour Personal Finance and Investment

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.

About the Reviewer

Blake Esken
Blake Esken Los Angeles Times

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