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Should you deposit $500 into a CD?

In today's rate environment, savers should strongly consider opening a CD to start earning more money. Getty Images

Whether you're looking to buy a new home, refinance a new one or simply using your credit card to go grocery shopping, you're experiencing significantly elevated borrowing costs as of late. Due to stubborn inflation and the higher interest rates aimed to tame it, expenses have risen and borrowing has become much more expensive. There has been one major silver lining, however: the returns you can get on your savings.

With a high-yield savings or certificate of deposit (CD) account, savers can earn many times more than they would have just a few years ago and — depending on the bank — up to 12 times the national average. CDs, in particular, offer attractive benefits in today's high-rate environment, leading many to consider depositing $1,000, $5,000 or even more into one of these accounts

But what about those who may not have that much money but still want to take advantage of today's high-interest-earning CDs? Should you deposit $500, for example, into a CD now? Or are you better off looking elsewhere? That's what we will break down below.

Explore your CD account options online here to see how much more you could be earning.

Should you deposit $500 into a CD?

There are many compelling reasons to open a CD today, even with a $500 deposit. For starters, rates on CD accounts are the highest they've been in years, with many heading past 6% — and likely to get there if the Federal Reserve raises rates again before the year is out. Compared to the minimal 0.45% most savers are getting with their regular savings accounts, they're likely losing money by not moving at least some of their funds into a CD.

But that's not all.

CD terms are also locked, so the high interest rate you can open an account with today will remain the same throughout the CD's full term, even if the rate environment ultimately changes. This can incorporate some much-needed predictability and reliability into your budget. 

Plus, since CDs are locked (you'll need to pay a penalty if you withdraw your funds early), you'll also protect against any impulse purchases or the cycle of withdrawals and deposits your regular savings may be accustomed to. And CD's are safe — FDIC-insured up to $250,000 per account, per lending institution.

For all of these reasons, a CD in almost any amount is worth opening today. So don't wait until rates drop. Get started here now.

How much can you make by depositing $500 into a CD?

Obviously, the more you deposit into a CD, the more you'll make in interest — and the more that interest will compound over time. But the returns on a $500 deposit aren't exceptionally low, either. Here's what you can expect to make with varying rates that are available now:

  • At 6.00%: $30 (for a total of $530 total after one year)
  • At 5.75%: $28.75 (for a total of $528.75 total after one year)
  • At 5.50%: $27.50 (for a total of $527.50 total after one year)

While those may not seem like big earnings, they're better than nothing and significantly better than what you're earning with a regular savings account. In fact, you could put $1,000 into a regular savings account and still not make the same amount you'd make by depositing just $500 into a CD today.

Crunch the numbers with some of today's top banks now and start earning more on your money.

The bottom line

The more you deposit into a CD, the more you'll obviously make. But that doesn't mean that smaller deposits aren't worth making now. They usually are — particularly when stacked up against the paltry amount of interest most regular savings accounts are offering. So explore your CD options and consider an online bank and begin earning more interest today. 

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