How much interest can a $50,000 5-year CD account earn now?
There's more money to be earned by savers again. That was one of the major takeaways this week after the Federal Reserve increased its benchmark interest rate for the first time since 2023. A higher rate from the central bank will inevitably lead to higher rates on borrowing products and select savings accounts. That could lead to significant interest-earning opportunities, particularly if you use a certificate of deposit (CD) account, which already came with rates in the low 4% range before the Fed's latest rate hike was even announced. Now, CD rates could tick up yet again, giving savers an even more profitable home for their money.
And, if they deposit a large, five-figure amount such as $50,000, that profit could be significant and even more so if they let the money grow in an account with an extended term, such as five years. Still, a $50,000 5-year CD won't be the best idea for most savers, especially those unsure of their capacity to keep the funds frozen in the account for the full term. An early withdrawal penalty on CDs should always be avoided, but one levied against a $50,000 5-year CD, in particular, could be especially costly.
In turn, it's important to know the interest-earnings before getting started to ensure that the loss of access will actually be worth it. Below, we'll break down the returns that savers can expect to see if they get started now.
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How much interest can a $50,000 5-year CD account earn now?
Besides 3-year CD terms, 5-year CDs come with some of the highest interest rates available this September. With rates here ranging from 4.35% to 4.45%, 5-year CDs are currently more profitable than high-yield savings, money market and traditional savings accounts. CDs have fixed rates, too, meaning that the high rate you secure today will hold through a 2031 maturity date, no matter what happens to the interest rate climate during that time.
Here's what the interest-earnings will look like on a $50,000 5-year CD that's opened now, calculated against three top rates and the assumption that the account is maintained without penalty for the full term:
- $50,0000 5-year CD at 4.35%: $11,863.18 upon account maturity
- $50,000 5-year CD at 4.40%: $12,011.54 upon account maturity
- $50,000 5-year CD at 4.45%: $12,160.17 upon account maturity
Earnings on a $50,000 5-year CD will range from $11,863 to $12,160, approximately, if the account is secured now and kept without penalty for the next half a decade. That said, while these rates are some of the best available now, savers may be able to find even higher options by diligently shopping around online.
Online marketplaces list all of the relevant information you need to make an informed and quick decision. Just note that the higher rates tend to be aligned with online banks and institutions, so it may be worth starting your CD account search with those types of banks, specifically.
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The bottom line
With more than $11,000 in interest earnings at play and potentially upwards of $12,000 with a higher-rate option, a $50,000 5-year CD account could make sense for some savers right now. While they may be able to make more by investing, the risks there are also exponentially higher. With this unique account type, however, they can deposit their money, calculate their return with precision and enjoy the advantage of being able to shift their financial focus elsewhere while their money works for them. And after this week's Fed rate hike and still sticky inflation to contend with, that can be an advantageous position to be in.
