How much interest can an 18-month CD earn now (and is it worth opening)?

In today's cooling interest rate environment, profitable savings account options are becoming scarcer. The average rate on a traditional savings account is a minimal 0.40% now. High-yield savings accounts, meanwhile, have rates much higher than that, but considering that these rates are variable and responsive to market conditions, they may not be the best home for your money now that interest rates are routinely being cut again.

In today's climate, a certificate of deposit (CD) account may be your best option. Rates here are as high or higher than the top high-yield savings accounts, and CD rates are fixed, meaning that your interest-earning ability will remain strong even as additional rate cuts are issued. With CD terms ranging anywhere from three months to many years, there are plenty of options to choose from, too. But in today's economy, an 18-month CD, in particular, can be especially beneficial. 

Interest rates on these accounts are competitive, but the CD term isn't so lengthy as to eliminate your flexibility. In just a year and a half, you can pivot with relative ease. To best determine the value of an 18-month CD, however, it helps to first know the interest-earning potential. So, how much interest can an 18-month CD earn right now (and is it worth opening)? Below, we'll crunch the numbers and break down the benefits.

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How much interest can an 18-month CD earn now?

The top 18-month CD interest rates range from 3.95% to 4.00% currently. Here's how much a CD account with these two rates could earn, calculated alongside a variety of deposits and the assumption that no early withdrawal penalties are issued against the account:

• $1,000 18-month CD at 3.95%: $59.83 upon maturity
• $1,000 18-month CD at 4.00%: $60.50 upon maturity

• $5,000 18-month CD at 3.95%: $299.16 upon maturity
• $5,000 18-month CD at 4.00%: $302.98 upon maturity

• $10,000 18-month CD at 3.95%: $598.31 upon maturity
• $10,000 18-month CD at 4.00%: $605.96 upon maturity

• $20,000 18-month CD at 3.95%: $1,196.63 upon maturity
• $20,000 18-month CD at 4.00%: $1,211.92 upon maturity

• $25,000 18-month CD at 3.95%: $1,495.78 upon maturity
• $25,000 18-month CD at 4.00%: $1,514.90 upon maturity

• $50,000 18-month CD at 3.95%: $2,991.56 upon maturity
• $50,000 18-month CD at 4.00%: $3,029.80 upon maturity

So even with a modest deposit of $5,000 into an 18-month CD now, savers stand to earn hundreds of dollars in guaranteed interest. And the more they deposit, the more they can potentially earn, with thousands of dollars worth of interest possible and available in less than two years. If these returns sound advantageous to you, then consider locking in a high 18-month CD rate while they're still readily accessible.

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Is an 18-month CD account worth opening now?

If you want to earn hundreds and potentially thousands of dollars in interest with virtually no risk, then an 18-month CD could be the smart way to do it. Returns here are guaranteed and high, but savers won't need to forego access to their funds for an extended period as they would with 2-year CD terms or other accounts with even longer terms. And by keeping their CD term moderate, savers are less likely to need early access and, hence, can better avoid having to pay an early withdrawal penalty. 

That said, if you need to maintain access to your funds, a high-yield savings account can be a viable alternative, even if your long-term interest-earning capacity with that account type is likely to be less profitable than the 18-month CD option.

The bottom line

An 18-month CD opened this December can potentially earn savers between $61.00 and $3,030.00, approximately, depending on the deposit and the rate they open the account with. That represents real interest that can be earned simply by transferring a portion of your funds into one of these accounts now. Just be sure of your ability to keep the funds frozen for the full term, as an early withdrawal penalty here could easily negate most or even all of the interest earned to that point.