How much interest will an $18,000 long-term CD account earn if opened this July?
While it may be noble and even logical to wait until you hit a milestone number in your savings account to determine a long-term home to park that money, the reality is that in today's uneven economy, that's a luxury many savers simply can't afford. With inflation surging to its highest point in three years and job growth slowing, it makes sense to move that money out of a traditional savings account (with a paltry average rate of just 0.38% now) and into one that's more profitable. And that's true even for less conventional amounts such as $18,000.
A certificate of deposit (CD) account can be one of your better options, especially if you choose a long-term version which matures in 18 months or longer. Interest rates on this account type sit comfortably above 4% now, giving savers more than $4 in interest for each $100 deposited. Considering the longer term, savers will also secure extended protection for their money, which is critically important in today's economy.
Before getting started, however, savers need to crunch the potential returns. An early withdrawal penalty on an $18,000 CD account, after all, could be steep. Knowing what you stand to earn, however, can make giving up access to your funds worth proceeding with. So, how much interest will an $18,000 long-term CD account earn if opened this July? That's what we'll break down below.
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How much interest will an $18,000 long-term CD account earn if opened this July?
Determining the precise interest-earning potential of a long-term CD account is simple to complete thanks to the account's fixed interest rate, which will hold through the maturity date. Here's how much interest an $18,000 long-term CD account will earn, then, calculated against the top rates associated with five different terms and the assumption that no fees are levied against the account before its maturity date arrives:
- $18,000 18-month CD at 4.20%: $1,145.82 upon maturity
- $18,000 2-year CD at 4.16%: $1,528.75 upon maturity
- $18,000 3-year CD at 4.15%: $2,335.29 upon maturity
- $18,000 5-year CD at 4.20%: $4,111.14 upon maturity
- $18,000 10-year CD at 4.30%: $9,423.04 upon maturity
Savers stand to earn more than $1,100 with the shortest option on this list, more than $9,000 with the longest and somewhere in between, depending on how long they feel comfortable locking their funds into an account. With these returns substantial, then, and with them guaranteed in a way that variable rate savings accounts can't offer and in a way that investments can't either, a CD makes a lot of sense for savers right now. And that's true even if they haven't quite reached a milestone amount of money in their current savings account.
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Look to online banks, specifically
While your local banking branch may offer the most convenient way to quickly open a CD account, you shouldn't do so without first checking out your online offers. Online banks tend to offer better rates for savers than those banks with in-person branches. Because the former doesn't have the maintenance costs associated with the latter, they can often provide better rates and terms to savers. Fortunately, with online marketplaces listing multiple banks, rates, terms and more, it's easier than ever to compare all of your options right now.
The bottom line
An $18,000 long-term CD account opened this July can generate thousands of dollars worth of interest for savers. But that substantial return isn't the only advantage a long-term CD account offers, as savers will also be able to protect their principal for an extended period, which is a timely feature for many right now. So, if you want to earn a big return, add a layer of protection for your money and feel comfortable doing so now, before you've reached your milestone savings goal, a $18,000 long-term CD account can be worth serious consideration.
