How much interest can a $40,000 short-term CD earn now (and is it worth opening)?
A $40,000 short-term CD can earn a significant return for savers now. But that's not the only advantage to know.
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If you've been able to save a large amount of money – such as $40,000 – in recent years, then you probably want to keep a close eye on it. And investing it now, when stock returns are high, is understandable. After all, returns on stocks have historically been as high as 16% . But stocks are also known for big losses, which isn't really a concern when depositing this much money into a high-rate savings account. If you deposit it into a certificate of deposit (CD) account , for example, not only will you not have to worry about your principal being impacted, but you'll also grow your interest with a rate of 4% or higher right now.
The catch with CD accounts, however? You need to commit to leaving your funds in the account until the account has matured or an early withdrawal penalty could wipe out all of the interest earned to that point. So that rules out depositing your $40,000 into this account type, right?
Not necessarily. With a short-term CD account, you'll hit your maturity date in 12 months or less, depending on the term you choose. But you'll still earn a rate of 4%, approximately, making this a profitable, short-term home for your five figures. And you'll maintain flexibility and be able to pivot your savings strategy relatively quickly, too. To best determine the value of a $40,000 short-term CD account now, it helps to know the interest-earning potential it offers. And thanks to the fixed interest rate that a CD employs, that's easy to determine. Below, we'll crunch the returns.
Start earning more interest on your money with a high-rate CD account now .
How much interest can a $40,000 short-term CD earn now?