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If you have $150,000 saved right now, many would advise against putting it into a certificate of deposit (CD) account. Rates on these accounts are fixedmeaning that you’ll need to sacrifice access to your money to earn the interest rate it comes with. The top rates available, meanwhile, are generally around 4%. While that’s competitive amid savings accounts, it pales in comparison to the historic 10% return many are accustomed to receiving with stock market investments. And, if you ultimately need to regain access to your funds before the account matures, the early withdrawal penalty on an account of this size could be substantial.
But the economic climate many are operating in now is also far from traditional. Inflation just surged to its highest level in years, essentially freezing today’s elevated interest rates in place for the foreseeable future. That leaves borrowing costs high, uncertainty elevated and the need for a safe and predictable home for your money more important than it would otherwise be. In this environment, then, the value of a $150,000 CD account may be worth serious reconsideration. That begins with determining the interest-earning potential it represents.
So, how much interest will a $150,000 CD account actually earn now? Thanks to the fixed rate the account employs, these figures are simple to calculate. Below, we’ll do the math.
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How much interest will a $150,000 CD account earn now?
CD account interest rates will vary depending on the lender and the term (or length) of the account. Here’s how much interest $150,000 will generate when calculated against the top rates available for a variety of terms and the assumption that no fees or penalties are levied against the account:
- $150,000 3-month CD at 3.90%: $1,441.58 upon maturity
- $150,000 6-month CD at 4.10%: $3,044.11 upon maturity
- $150,000 9-month CD at 4.00%: $4,477.87 upon maturity
- $150,000 1-year CD at 4.10%: $6,150.00 upon maturity
- $150,000 18-month CD at 4.09%: $9,295.96 upon maturity
- $150,000 2-year CD at 4.16%: $12,739.58 upon maturity
- $150,000 3-year CD at 4.13%: $19,363.13 upon maturity
- $150,000 5-year CD at 4.15%: $33,817.83 upon maturity
In short, the interest-earning capacity of a $150,000 CD account is substantial. Savers will earn a minimum of $1,440, approximately, in just around 90 days and tens of thousands more, depending on how long they leave the funds in the account.
Even a 6-month CD, which will allow savers to weather today’s economic volatility while still allowing them to pivot relatively quickly, will result in a return worth more than $3,000. Consider all of these rates, terms and returns carefully, particularly the short-term options, as they could provide an ideal combination of a big return without an extended commitment.
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The bottom line
A $150,000 CD account opened this May can generate approximately $1,440 in interest with a 3-month option or just under $34,000 with a 5-year option. So there are plenty of ways to earn a big return with a CD of this size. And unlike stock market investments or variable, high-rate savings account alternatives, those returns will be guaranteed. Before getting started, however, be sure to take the time to shop around for accounts both at your local bank branches and with online institutions, the latter of which can often offer better rates than their counterparts with physical locations.