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A certificate of deposit account has multiple advantages for savers in today’s economy. For starters, the account comes with an elevated interest rate of around 4% right now. That makes it exponentially more profitable than a traditional savings account with a rate under 0.40%. That interest rate is also fixedmeaning that it will hold until the account matures, even if the overall interest rate climate cools during that period. And CDs are safe and FDIC-insured up to $250,000 per account, adding another layer of protection for savers. To secure these benefits, however, savers will have to commit to leaving their funds in the account through the maturity date. Taking the money out early will lead to an early withdrawal penalty worth most or all of the interest earned on the account to that point.
This is where the advantages that a 6-month CD account provides come into consideration. Rates on accounts with this term are still high, but the term won’t be so lengthy as to prevent savers from pivoting their strategy later in the year. They’ll also protect their principal from the market swings that they would otherwise be vulnerable to by keeping their funds in select investments. To best determine the value this account offers savers now, it helps to begin with the interest-earning potential. And that’s easy to calculate thanks to the account’s fixed rate. Below, we’ll do the math.
Start earning more interest on your money with a high-rate CD account here.
How much interest can a 6-month CD earn now?
CD interest rates will vary slightly based on the bank. Here’s how much interest a 6-month CD can earn right now, calculated against a readily available rate of 4.10% and eight different deposit amounts:
- $2,500 6-month CD at 4.10%: $50.74 upon maturity
- $5,000 6-month CD at 4.10%: $101.47 upon maturity
- $10,000 6-month CD at 4.10%: $202.94 upon maturity
- $25,000 6-month CD at 4.10%: $507.35 upon maturity
- $40,000 6-month CD at 4.10%: $811.76 upon maturity
- $50,000 6-month CD at 4.10%: $1,014.70 upon maturity
- $75,000 6-month CD at 4.10%: $1,522.06 upon maturity
- $100,000 6-month CD at 4.10%: $2,029.41 upon maturity
Savers can earn around $50 with a CD of this length or more than $2,000, depending on how much they deposit, and that interest will be made available before the end of 2026. So it may be worth considering a CD account as part of your broader savings strategy right now. And it’s certainly worth investigating if you’re currently keeping any sizable amount of money in a traditional savings account, as you’re technically losing money by not shifting into a high-rate alternative.
Learn more about your current CD account options now.
Is a high-yield savings account the better option now?
High-yield savings accounts have interest rates that are competitive with the top CD rates now. And, unlike with a CD, savers won’t need to give up access to their money as they can continue to make deposits and withdrawals as needed.
While this account type does have a variable rate, making it less reliable than a CD account, the chances of that rate declining short-term seem low right now as the Federal Reserve continues to keep interest rates on hold. So, if you want to earn a competitive return on your money and don’t want to give up access to your funds to get it, a high-yield savings account merits serious consideration this month.
The bottom line
Savers can earn a sizable return on their money with a high-rate 6-month CD right now, and they won’t need to sacrifice extended access to their money to earn it. That said, it’s critical that savers only deposit an amount that they can comfortably keep frozen until the maturity date hits, as the early withdrawal fee could wipe out all of your interest, bringing you right back to your initial starting point. Consider shopping online for accounts, too, as online banks and institutions tend to offer higher CD rates than those banks with in-person branch locations.