Recognized for reasonable earnings and minimal danger, certificates of deposit (CDs) aren’t precisely thrilling — however that doesn’t imply you must overlook them. Although charges began dropping towards the top of 2024, CDs can nonetheless supply bang in your buck: Among the highest-yielding CDs are at present incomes greater than 4% APY. Should you’re in search of a deposit account that gives aggressive returns and the security of FDIC insurance coverage, contemplate opening a CD.
Not satisfied? Learn on to learn the way a lot you possibly can earn by placing $10,000 in a CD for 5 years.
Should you’re nationwide averages, CD charges in all probability gained’t impress you. The typical 60-month (five-year) CD earns an rate of interest of 1.34%, in line with the FDIC.
Fortunately, averages are simply averages, and there are a lot of banks and credit score unions providing better-than-average CD charges. For instance, America First Credit score Union tops the listing of the greatest CD charges, with a number of phrases boasting rates of interest round or above 4%.
The distinction between incomes the typical rate of interest and incomes 4% could not sound like loads, however the numbers inform a special story.
The desk beneath reveals how a lot you’d earn over 5 years by depositing $10,000 into two totally different CDs: One incomes the typical 60-month CD fee of 1.34%, and one incomes a extra aggressive 4%. (For simplicity’s sake, calculations are primarily based on APY.)
Because the desk reveals, you’d earn a complete of $2,166.53 in curiosity over 5 years with a CD incomes 4% APY. With a mean CD, you’d solely earn $688.20. In different phrases, choosing the proper CD in your $10,000 would web you greater than 3 times the curiosity in comparison with a mean account.
CD charges and earnings by time period
Rates of interest additionally fluctuate by CD time period — that’s, the variety of months or years till the CD matures.
Historically, longer CD phrases have supplied increased charges, however the financial atmosphere can have an effect on this pattern. When rates of interest are excessive and anticipated to drop within the close to future, shorter CD phrases could supply increased charges. That’s as a result of banks don’t wish to be on the hook to pay a excessive fee for a number of years if the Federal Reserve cuts charges.
In accordance with the FDIC’s January 2026 report of Nationwide Charges and Price Caps, 12-month CDs at present supply the best return. Right here’s a take a look at present charges for a wide range of totally different CD phrases and the quantity of curiosity they’d earn by the point they mature:
Bear in mind, the longer the CD time period, the extra time your cash has to earn curiosity (and for that curiosity to earn curiosity). So regardless that the 60-month CD above earns a decrease fee in comparison with the 12-month CD, it nonetheless earns extra over the course of its time period.
Learn extra: Brief- or long-term CD: Which is greatest for you?
CDs aren’t the one place to earn curiosity in your money. If the inflexibility of a CD doesn’t make sense for you, contemplate these options.
A high-yield financial savings account (HYSA) additionally permits you to earn a aggressive rate of interest in your financial savings, plus, your cash’s there if you want it. In contrast to a CD, you may usually withdraw cash out of your HYSA at any time when it’s good to, although there could also be month-to-month withdrawal limits.
Presently, the greatest high-yield financial savings accounts are paying charges akin to the highest CDs, providing APYs of as much as 4% APY. However remember that charges can change after you’ve opened an account.
Learn extra: Fastened fee vs. variable fee: What is the distinction, and why is it vital?
Cash market accounts (MMAs) work equally to financial savings accounts, however in addition they embrace sure traits of checking accounts. For instance, MMAs usually earn aggressive curiosity, however in addition they usually include checks and/or a debit card.
Nonetheless, one draw back — and potential roadblock — is that MMAs generally have increased account minimums in comparison with financial savings accounts or CDs.
Presently, the greatest cash market accounts are providing APYs of as much as 4.1%.
Should you’re keen to take barely extra danger for probably increased returns, you may contemplate bonds.
Like CDs, some bonds present mounted funds over a gradual time period.
Technically, a bond is an funding. You, the investor, lend cash to the federal government or a company; in alternate, you obtain recurring funds at a hard and fast rate of interest till the bond matures.
Whereas bonds aren’t federally insured the way in which CDs are, they are typically very low-risk investments. Bonds also can supply barely extra flexibility — you may promote bonds earlier than they mature, and when you’ll miss out on future returns, it’s possible you’ll not should pay penalties.
Word: Rates of interest on HYSAs, MMAs, and sure varieties of bonds can change after you make an preliminary deposit. In contrast to CDs, this makes it unimaginable to foretell long-term earnings.
If in case you have $10,000 (or any amount of cash) you may put aside for a time period, a CD is perhaps value contemplating. As a result of CDs usually supply a hard and fast rate of interest all through their time period, they provide predictable earnings. Should you can afford to go away a $10,000 deposit alone for 5 years, you may open a CD understanding precisely how a lot you’ll earn.
Nonetheless, be cautious about placing cash in a CD when you could must withdraw it earlier than the account matures. Should you do, you’ll possible should pay early withdrawal penalties.
Should you want an account with extra flexibility, a financial savings or cash market account could also be a greater possibility. Alternatively, when you’re working with an extended timeframe and are keen to tackle extra danger, you may contemplate investing that cash in bonds, shares, mutual funds, or ETFs.
Learn extra: 3 sensible issues to do when your financial savings account hits $10,000
The quantity you’ll earn by placing $10,000 in a CD for 5 years is determined by your rate of interest, which varies by monetary establishment. As of January 2026, the nationwide common fee for a five-year CD is 1.34%. At that fee, you’d have a complete of $10,688.20 after 5 years. Nonetheless, when you might discover a extra aggressive CD incomes 4% APY, you’d find yourself with $12,166.53.
One-year CD earnings rely in your CD fee. The upper your fee, the extra you’ll earn. With the present nationwide common one-year CD incomes 1.61% APY, you’d earn $161 in a single yr. At 4% APY, you’d earn $400.
It is determined by your priorities. Should you’re incomes a mean fee, it’s in all probability not value placing your cash in a CD — you possibly can earn extra with the precise financial savings account. Nonetheless, if you will discover a CD incomes a extra aggressive fee, equivalent to 4% APY, it could be value contemplating.
Whether or not it’s a good suggestion is determined by how quickly you’ll want that cash, whether or not you’re snug with it being inaccessible for a time period, and whether or not you will discover another — equivalent to an HYSA — that gives comparable charges.
