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# How Much Does a \$50,000 CD Make?

• If you invest \$50,000 into a one-year CD with an average annual percentage rate (APY) of 1.85%, you will earn \$925 in interest over the term.
• Some banks offer much higher rates than the industry average APY, so you should compare terms and rates before you invest.
• If you invest \$50,000 into a one-year CD with a much higher APY of 6.00%, you willl earn \$3,000 in interest over the term.

## How much does a \$50,000 CD make in a year?

As reported by the FDIC, the average annual percentage yield (APY) for a one-year certificate of deposit (CD) is 1.85%. If you invest \$50,000 in a one-year CD with this APY, you will earn \$925 in interest by the end of the term.

However, you can find banks offering CDs with as much as 6.00% APY.  If you invest \$50,000 in a 6.00% CD, you’ll earn \$3,00 in interest in a year.

You can see in the table below how choosing a CD with a higher APY will result in greater earnings.

Earnings on a \$50,000 one-year CD

APY Interest earned annually on \$50,000 Total ending balance
1.85% \$925 \$50,925
4.50% \$2,250 \$52,250
5.00% \$2,500 \$52,500
5.50% \$2,750 \$52,750
6.00% \$3,000 \$53,000

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 does a \$50,000 CD make over different terms?

A CD’s term is how long you must leave your deposit in the account until it matures. It can range from a few months to several years.

Here are some potential earnings for a \$50,000 CD at different terms with average industry APYs.

Earnings on a \$50,000 CD over different terms

CD term Average APY Interest earned on \$50,000 at maturity Total ending balance
1 month 0.23% \$9.57 \$50,009.57
3 months 1.53% \$190.16 \$50,190.16
6 months 1.81% \$450.47 \$50,450.47
1 year 1.85% \$925.00 \$50,925.00
2 years 1.58% \$1,592.48 \$51,592.48
3 years 1.44% \$2,191.25 \$52,191.25
4 years 1.36% \$2,775.99 \$52,775.99
5 years 1.43% \$3,678.72 \$53,678.72

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 \$50,000 CD with our top banks?

Some banks offer much higher APYs for CDs than the industry average. You can expect the following earnings with our top picks for the best short-term CDs of varying durations and annual compounded interest.

Earnings on short-term \$50,000 CDs with our top banks

Bank Term APY Earnings at maturity Total ending balance
Mission Valley 1 month 5.25% \$213.66 \$50,213.66
Banc of California 3 months 5.34% \$654.53 \$50,654.53
Western Alliance 3 months 5.15% \$631.68 \$50,631.68
Quontic 6 months 5.10% \$1,259.15 \$51,259.15
Sallie Mae 10 months 5.10% \$2,116.14 \$52,116.14

The calculations shown are just a simple example. Always seek advice from a qualified professional before making important financial decisions or long-term agreements.

Here are the potential earnings for one-year or longer CDs with some of our top banks.

Earnings on long-term \$50,000 CDs with our top banks

Bank Term APY Earnings at maturity Total ending balance
Barclays 12 months 3.75% \$2,425.00 \$52,425.00
Nelnet Bank 12 months 4.86% \$2,430.00 \$52,430.00
Quontic 12 months 4.50% \$2,250.00 \$52,250.00
Gainbridge 36 months 6.00% \$9,550.80 \$59,550.80

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 do CDs work?

Certificates of deposit (CDs) are deposit accounts that banks, credit unions and brokerages might offer. These accounts offer a fixed interest rate and relative safety for your investment. In exchange for the interest you’ll earn, you agree to leave your money in the account without making withdrawals until the CD reaches maturity. Several factors can affect how much you’ll earn from a \$50,000 CD.

### APY

A CD’s annual percentage yield (APY) tells you how much it will earn from interest in a year. It takes into account compounded interest. By contrast, the interest rate you earn simply states the rate at which interest is earned on your deposit and doesn’t take into account the effect of compounding.

CD laddering is an investment strategy in which you divide your initial investment between multiple CDs with staggered maturity dates. For example, you might choose to invest \$10,000 each in CDs that mature in three months, six months, nine months, 12 months and 15 months.

A CD ladder allows you to take advantage of the higher interest rates offered by CDs while having access to your money as each CD matures. When a CD matures, you can reinvest the funds in a new CD at the longest term so that the ladder and maturation cycle continue.

### Term length

The term of a CD is how long you must agree to keep your funds in the account before you can make withdrawals without penalty. Banks previously offered the best rates for CDs with multi-year terms. However, many banks now offer high rates for short-term CDs, so make sure you compare both terms and rates before investing your money.

### Compounding frequency

Banks compound interest at different frequencies. When interest is compounded, you earn interest on the interest that’s been paid and the principal balance. Banks might compound interest in CDs each day, month, quarter or year. When interest is compounded more frequently, you’ll earn more money over the CD’s term.

### Penalties

Under federal law, financial institutions must assess a penalty of at least seven days of interest for early withdrawals from CDs. However, the government doesn’t set a maximum penalty amount.

Most financial institutions assess penalties of 60 days of interest for early withdrawals from one-year CDs. The penalties may be higher for CDs with longer terms. Make sure you read the terms of the CD agreement before you deposit your money to understand what you’ll have to pay if you make an early withdrawal.

## Should I put \$50,000 in a CD?

There are reasons for and against investing \$50,000 into a CD. When interest rates are high, CD rates are higher. This means you could earn a fixed interest rate for the CD’s duration and know how much you will earn. CDs are generally safe and secure investments.

However, you could make more money by investing \$50,000 elsewhere. For example, stock and bond investments tend to pay much higher returns than CDs. They also carry much more risk. You should think about your ability to tolerate risk, how long until you retire and when you’ll need to access your money before you decide to invest \$50,000 in a CD.

## Alternatives to CDs

Some alternatives to CDs you might consider for a \$50,000 investment include:

### Money market account

Banks and credit unions offer money market accounts. These deposit accounts pay higher interest rates than traditional savings accounts and have some features similar to those of checking accounts.

With a money market account, you can complete transactions with a debit card or by writing checks. However, your bank will likely limit the number of transactions you can complete with your MMA each month. An MMA can be a good option if you need access to your money and want to earn more interest than a traditional savings account will pay. However, MMAs offer much lower interest rates than CDs.

### High-yield savings account

High-yield savings accounts are offered by online banks and at some in-person banks. These accounts pay much higher interest rates than traditional savings accounts but are typically slightly less than CD rates.

A high-yield savings account generally pays more than an MMA. It is a good choice if you want more liquidity than a CD and higher interest than an MMA or traditional savings account.

## FAQ: How much does a \$50,000 CD make?

### How much does a \$50,000 CD make in one year?

How much a \$50,000 CD will earn in a year depends on its APY, laddering strategy and whether you make early withdrawals. Assuming you purchase a \$50,000 CD at the average rate of 1.85% APY, it will earn \$925 in one year. If you instead invest \$50,000 in a CD at a rate of 6.00% with annual compounding, you’ll earn \$3,000.

### How much does a \$10,000 CD make in one year?

If you invest \$10,000 in a CD with an APY of 1.85%, you’ll earn \$185 in one year. If you instead invest your money in a CD with an APY of 6.00%, you’ll earn \$600.

### How does CD interest work?

Interest on a CD is fixed and is paid over the CD’s term. Since the interest rate doesn’t vary, you’ll know what you’ll earn from your CD regardless of what happens in the market. Most financial institutions compound interest in CDs. As your CD earns interest, it is added to the principal and can then earn interest itself when it compounds. Banks might compound interest daily, monthly, quarterly or yearly. Those that compound interest more often yield higher earnings.

### What factors impact how much I earn on a CD?

Several factors can affect how much you’ll earn on a CD, including:

• APY - How much the CD earns in a year with compounded interest
• Term - Some longer-term CDs pay higher rates
• Compounding frequency - Frequent compounding means higher earnings
• Early withdrawals - Withdrawals before maturity come with substantial penalties

### Is it worth putting \$50,000 in a CD?

Whether a \$50,000 CD investment is worthwhile depends on your financial goals. If you have a conservative risk profile, are nearing retirement and will not need to access your money during the CD’s term, it can be a good choice since interest rates are currently high.

However, if you are less risk-averse, are younger, have a long time to invest or might need to access your funds, a \$50,000 CD is likely not a good choice. Instead, you might consider building an emergency fund or saving for a down payment in an MMA or high-yield savings account. If you are looking for long-term investments and can tolerate risk, you might consider opening a brokerage investment account and investing in stocks and bonds.

Christy Montour Personal Finance and Investment

Christy Montour is a seasoned finance writer with extensive experience in explaining a wide range of investment types, retirement accounts, and insurance products. With a background in taxation from law school, Christy possesses a deep knowledge of tax strategies and the tax code.

Christy has written thousands of blogs for clients on finance and investment topics. She covers a wide range of subjects, from the Offshore Voluntary Disclosure Program to IRS installment plans, offers-in-compromise, tax liens, levies, and criminal tax issues such as tax evasion and fraud. Christy’s expertise allows her to break down complex financial topics into clear, accessible content for her readers.