A $100,000 five-year certificate of deposit (CD) could generate more than $23,700 in interest for savers who lock away their money until maturity in 2031.
The fixed-rate account may appeal to those seeking a predictable return without exposing their principal to investment risks. However, the money would need to remain deposited for the full five-year term, and withdrawing it early could result in a penalty.
How much interest can a $100,000 five-year CD earn?
The amount earned depends on the rate offered by the lender. Based on rates currently available, a $100,000 CD opened in September could produce the following returns if held until maturity:
At an interest rate of 4.35%, the account could earn $23,726.37 by maturity. At 4.40%, the return could rise to $24,023.07, while a rate of 4.45% could generate $24,320.35.
The difference between the lowest and highest rates in this example is nearly $600, highlighting the importance of comparing CD accounts before depositing such a substantial sum.
CD rates vary between lenders and terms, so choosing the first attractive offer could mean missing out on additional interest. Savers should also consider whether they can afford to leave the full $100,000 untouched for five years.
A five-year CD offers a fixed return and avoids the uncertainty associated with investing. For savers who do not want to risk their principal, that certainty may be valuable, particularly if they are comfortable committing their funds until 2031.
However, the arrangement may not suit anyone who needs regular access to their money. Those uncertain about the commitment could consider a shorter CD term, a smaller deposit or a high-yield savings account instead.
For savers able to maintain the account until maturity, a $100,000 five-year CD could provide a predictable return of between $23,726.37 and $24,320.35, depending on the interest rate secured.
