Here’s how much interest a $40,000 5-year CD account can earn savers now

A lot can happen to your finances over a multi-year period. So, locking it away for an extended time, such as five years, may not be advantageous on the surface. And that’s what you’ll be required to do with a certificate of deposit (CD) account. CDs have high, fixed interest rates offering savers big returns in today’s elevated interest rate climate. To secure that interest, however, they’ll need to commit to leaving their money frozen in the account for the full term. An early withdrawal penalty can easily negate all of the interest earned on the account to that point. 

So, if you’re going to deposit a large, five-figure amount of money into a long-term CD, you’ll want to make sure it’s worth it. Fortunately, this is easy to determine thanks to the account’s fixed rate. Whether you’re looking to deposit $10,000 or as much as $40,000, then, you’ll be able to determine exactly how much you’ll earn in advance, before making any transfers. What will that look like with a $40,000 5-year CD opened in today’s climate, then? That’s what we’ll calculate below.

See how much interest you could be earning on your money with a CD account now.

Here’s how much interest a $40,000 5-year CD account can earn savers now

CD interest rates will vary by term and lender, with long-term options often offering higher rates than short-term counterparts. With 5-year CDs offering some of the highest rates available now across account terms, however, this could be the smart place to park your $40,000 if you’re looking to avoid market instability and want to be able to rely on a big return. Here’s how much interest a $40,000 5-year CD account can earn savers now, calculated against three of the top rates available today:

• $40,000 5-year CD at 4.20%: $9,135.86 upon account maturity
• $40,000 5-year CD at 4.25%: $9,253.86 upon account maturity
• $40,000 5-year CD at 4.35%: $9,490.55 upon account maturity

Savers will be positioned to earn between $9,100 and $9,500, approximately, with a 5-year CD account and that interest will be guaranteed as long as savers maintain the account up until the 2031 maturity date. And while that may seem difficult to do on the surface, especially considering that stock market returns are typically in the double digits, there’s a predictability and security available here that savers won’t be able to get elsewhere. 

That said, with rates on short-term CDs similar to those outlined above but with accessibility restrictions curtailed, short-term counterparts are also worth exploring before locking any of your money away.

See how high your current CD rate offers are online today.

Is a $40,000 high-yield savings account worth it instead?

With interest rates comparable to the top CD accounts, savers may be wondering about the merits of transferring their $40,000 into a high-yield savings account instead. With no accessibility restrictions, this could be a viable alternative. Savers just need to understand that rates on this account type are variable and subject to change over time, especially over an extended period. 

In other words, the interest projections here will change and will be less reliable than what the fixed-rate CD can offer. But if you’re willing to weather those changes, this can be a viable alternative for your $40,000 over the next few years.

The bottom line

A $40,000 5-year CD can produce a return worth more than $9,100 if opened now and potentially close to $9,500. But with rates varying from lender to lender, it behooves savers to shop around before committing to a specific bank. Fortunately, with online marketplaces making it easier than ever to compare rates, terms, banks and more, this process can easily be completed at home or via a mobile device right now, and, more importantly, you can start earning more interest on your money right away.