How much will a $10,000 CD earn in a year?
According to the FDIC, the average APY for a one-year CD is 1.85%. If you invest $10,000 into a one-year CD with a 1.85% APY, you’ll earn $185 at the end of the term.
However, many banks and credit unions offer CDs with much higher rates of up to 6.00%. If you invest $10,000 in one of these CDs, you’ll earn up to $600 in interest in a year.
You can compare the earnings on a $10,000 CD with a one-year term and different APYs in the table below.
| APY |
Interest earned annually on $10,000 |
Total ending balance |
| 1.85% |
$185 |
$10,185 |
| 4.50% |
$450 |
$10,450 |
| 5.00% |
$500 |
$10,500 |
| 5.50% |
$550 |
$10,550 |
| 6.00% |
$600 |
$10,600 |
The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
How much will a $10,000 CD earn over different terms?
CDs are available in a range of terms. The term is how long you agree to leave your money in the CD account in exchange for the interest.
Using the average APYs provided by the FDIC, you can see how a CD’s term can affect how much it will earn in the table below.
| CD term |
Average APY |
Interest earned on $10,000 at maturity |
Total ending balance |
| 1 month |
0.23% |
$1.91 |
$10,001.91 |
| 3 months |
1.53% |
$38.03 |
$10,038.03 |
| 6 months |
1.81% |
$90.09 |
$10,090.09 |
| 1 year |
1.85% |
$185.00 |
$10,185.00 |
| 2 years |
1.58% |
$318.50 |
$10,318.50 |
| 3 years |
1.44% |
$438.25 |
$10,438.25 |
| 4 years |
1.36% |
$555.20 |
$10,555.20 |
| 5 years |
1.43% |
$735.74 |
$10,735.74 |
The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
How much can I earn on a $10,000 CD with our top banks?
While the average APY for CDs is low, our top picks for the best banks offer high APYs on short-term CDs. You can earn more money with one of these CDs than you might from other options. The interest for the CDs in the tables below is compounded yearly.
The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
If you won’t need access to your money within a year, depositing it in a longer-term CD might make more sense. Keep in mind that you won’t be able to withdraw your money before the end of the term without penalties.
Here is what you might make with a longer-term CD from some of our top banks.
| Bank |
Term |
APY |
Earnings at maturity |
Total ending balance |
| Barclays |
12 months |
5.00% |
$500.00 |
$10,500.00 |
| Nelnet Bank |
12 months |
4.86% |
$486.00 |
$10,486.00 |
| Quontic |
12 months |
4.50% |
$450.00 |
$10,450.00 |
| Gainbridge |
36 months |
6.00% |
$1,910.16 |
$11,910.16 |
The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.
How does CD interest work?
CDs are offered by banks and credit unions. They have fixed terms from a few months to a few years. During the CD’s term, you agree you will not withdraw your money. Early withdrawals lead to penalties that amount to a substantial portion of any interest earned.
The bank or credit union offers a fixed interest rate payable over the agreed-upon term. This means that whether the prevailing interest rates go up or down during your CD’s term, you’ll receive the promised interest regardless of market fluctuations.
The interest earned by CDs is typically compound interest. This means the interest you earn will also earn interest as it compounds. The bank or credit union might compound interest each day, month, quarter or year. CDs that compound interest more frequently result in higher earnings.
Finally, CD rates vary significantly from one financial institution to another. You’ll need to shop around to find CDs with the best terms and APYs.
What factors impact how much I earn on a CD?
How much you’ll earn from a CD depends on multiple factors, including:
APY and interest rate
The APY offered by your CD has a large impact on how much you’ll earn. The annual percentage yield (APY) refers to how much interest you’ll earn from your deposit in a year, taking into account the effect of compounding interest. The interest rate the account doesn’t take into account is the effect of compounding and the rate at which interest is paid to you. Pay attention to both the interest rate and the APY when considering a CD.
CD laddering
One good way to take advantage of varying interest rates on CDs of different terms is to create a CD ladder. This involves splitting your $10,000 investment between CDs of different durations. For example, you might invest $2,500 each in CDs with three, six, 10 and 24-month terms.
As each of the shorter-term CDs matures, you can then invest that money in a new short-term CD. A CD ladder allows you to benefit from some of the introductory rates offered by banks for some short-term CDs while still enjoying the security offered by the long-term CD.
CD term length
Your CD’s term is how long you must leave your deposit in the account without withdrawals. As a result, with a long-term CD, you won’t have access to your money for a significant amount of time unless you’re willing to pay early withdrawal penalties. Because of this, you must be careful and think about your liquidity needs before you invest in a long-term CD.
Banks used to offer the highest rates for longer-term CDs. However, some financial institutions now offer higher rates on short-term CDs. Compare the rates offered by different CD products when you look at CDs with different term lengths.
Compounding frequency
The compounding frequency refers to how often the bank or financial institution compounds interest as it’s earned. Financial institutions may compound interest each day, month, quarter or year. In general, more frequent compounding means you will earn more during the CD’s term.
Early-withdrawal penalties
When you take out a CD, you agree with the financial institution that you will not withdraw your funds before the CD matures. If you do, you’ll face significant penalties reflected in your agreement’s terms.
Under federal law, the minimum penalty for withdrawing funds from a CD early is seven days of interest. However, banks can set their penalties at any amount equal to or greater than the federal threshold. Most assess early penalties of 60 days’ worth of interest on 12-month CDs and larger amounts for CDs with longer terms. Make sure you carefully review the CD agreement before signing and making a deposit.
Should I put $10,000 into a CD?
Investing $10,000 in a CD might be a good choice when interest rates are high if you anticipate market fluctuations may soon result in lower interest rates. It also can be a smart choice if you have a lower risk tolerance and want safe investments.
CDs pay fixed interest rates, which means you’ll know how much you’ll earn at the time you open your CD account. However, you will not have access to your money for the CD’s term, so if you anticipate you might need the funds sooner, you might want to consider an alternative.
Alternatives to CDs
Two alternatives to a CD that provide liquidity and easy access to funds include money market accounts and high-yield savings accounts.
Money market accounts
A money market account is a deposit account offered by banks and credit unions. It offers higher interest rates than a regular savings account.
With an MMA, you’ll also be able to make withdrawals with a debit card or check instead of having your money tied up for months. However, most banks limit the number of transactions you can make from a money market account each month.
An MMA is a better option to invest $10,000 if you think you might need to access your funds before a CD matures. You won’t face early withdrawal penalties when you complete transactions with your MMA. However, the interest rate for an MMA might be lower than what you could get with a CD.
High-yield savings accounts
High-yield savings accounts are available online and at some in-person banks. They offer much higher interest rates than traditional savings accounts and are often higher than those offered by MMAs.
A high-yield savings account provides better liquidity than a CD but not as much as an MMA. To access your funds, you’ll have to make in-person withdrawals or transfer funds from your online high-yield savings account to your checking account. The interest rates offered by high-yield savings accounts are typically close to those offered by CDs. You can learn more about how these types of accounts compare with our guide on CDs versus savings accounts.
