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CD Investments: How Much You Can Earn

Jan. 8, 2019
Banking, CDs
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CD investments can be part of your savings strategy if you’re focused on guaranteed returns. How much interest you can earn on a CD depends on the rates, which are climbing thanks to the rising-rate environment. See what the best CDs can earn below.

» Want to see specific rates? Check our list of best CD rates this month

Compare two CDs

Calculate what interest you’d get from two different CDs. If you want to see how rates really matter, keep the deposit and term lengths the same and see how the interest rate would affect your overall savings.


Here’s an example. If you invested $10,000 in a five-year CD at the national average rate of 1.25%, you would have earned about $645 in interest at the end of five years.

Now let’s try a top rate at an online bank. If you invested that same $10,000 in a five-year CD at 3.10%, your account’s looking good with $1,677 earned in interest, a difference of more than $1,000. (See rates at or above 3% APY on our list of best five-year CDs.)

Average CD rates

CD rates vary widely even at the same bank or credit union, but here’s a general trend: The longer the term, the higher the rate. In other words, when you sacrifice access to your money for longer, you earn more interest on your money. Some financial institutions also reward you with higher rates in exchange for higher minimum deposits. A CD that requires $5,000 to open an account might earn more than one that requires $1,000.

Best CD rates

If you shop around, you can find CDs that have rates more than double the national average. Online banks tend to have the top rates, followed by credit unions and traditional brick-and-mortar banks.

Compare some of our top-rated choices, all federally insured, in the table below:


NerdWallet bank rating:
4.0 NerdWallet rating



NerdWallet bank rating:
4.0 NerdWallet rating


NerdWallet bank rating:
4.0 NerdWallet rating




1-year APY


2.75%



3-year APY


2.75%


5-year APY



3.10%



Minimum deposit



$500






1-year APY


2.65%



3-year APY


2.75%


5-year APY



3.10%



Minimum deposit



No minimum






1-year APY


2.75%



3-year APY


2.90%


5-year APY



3.10%



Minimum deposit



$2,000




Compare more banks and CD rates here

» See the latest: NerdWallet’s list of best CD rates

Why should I consider CDs?

They’re safe. Like savings accounts, CDs are federally insured to protect your money, both at online and traditional banks as well as at credit unions. This means they have minimal risk, whereas investing in the stock market — another option to grow your money — is more unpredictable and can lead to losses, especially in the short term.

But CDs have an opportunity cost. The typical CD has a fixed rate, so once you lock up your money for months or years, you close the door to higher rates that might appear. (Not ready for a long commitment? See the best one-year CDs this month.)

Bottom line: CDs might be right for you if you want to avoid risky investments and you’ve set aside money you won’t need for some time.  (If, on the other hand, access is a priority, check out NerdWallet’s best savings accounts.)

» Not sure how long to invest? Read our guide on choosing the right CD term length

How to have CDs and flexibility

If you’re trying to decide between opening a CD and looking for something less restrictive, there’s a middle-of-the-road option: CD ladders. This is a savings strategy in which you open CDs of varying lengths. One common scenario involves opening five CDs, with terms of one year, two years, three years, four years and five years. The goal is to have one CD maturing each year to give you the option to reinvest or cash out each time. If that’s appealing, explore more about CD ladders.

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