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With stock market returns worth 10% or higher over the past 10 years, if you have a large, six-figure amount such as $100,000 available now, many would argue that it’s better to invest that money than to simply store it in a select savings account. The risks with investing in stocks, however, are well known and they can be easily circumvented with a fixed-rate savings account instead. A certificate of deposit (CD) account is one of them.
CD interest rates remain high right now and they’re positioned to rise higher later this month if the Federal Reserve proceeds with an interest rate hike, as many currently anticipate. And, if you elect to use a long-term CD, you can lock in that rate for a multi-year period, ensuring that your principal has long-term protection while earning a fixed rate of return that won’t change, even as the rate climate inevitably evolves during that same timeframe.
A 3-year CD, in particular, which offers one of the best rates available for savers this September, merits serious consideration. Still, savers risk having to pay an early withdrawal fee if they ultimately decide that they need to regain access to a portion of their money. And that fee could be steep on a $100,000 3-year CD account. It’s critical, then, to understand the interest-earning potential before making any transfers. Below, we’ll break down the returns that savers should be aware of before getting started.
See how much interest you could be earning with a CD account here.
How much interest can a $100,000 3-year CD account earn savers at today’s rates?
This September, 3-year CD accounts come with some of the highest rates available, not only across CD terms, but across high-yield savings and money market accounts, too. Here’s how much interest a $100,000 3-year CD account can earn savers at three of the top available rates available today (and the assumption that no fees or penalties are applied during the term):
- $100,000 3-year CD at 4.35%: $13,625.91 upon account maturity
- $100,000 3-year CD at 4.40%: $13,789.32 upon account maturity
- $100,000 3-year CD at 4.50%: $14,116.61 upon account maturity
With a return here ranging from $13,626 to $14,117, approximately, a $100,000 3-year CD account can’t be immediately discounted by savers unless they have an alternative way of guaranteeing this high of a return over the same time period. But with this return being locked in and the principal untouched in a way that stocks and bonds can’t offer, an account could be valuable for those savers who want to earn a predictable return while circumventing market instability.
That noted, it’s critical that you keep this account locked to realize this return. If you’re unsure of your ability to do so, an account with a different term or different deposit amount may be worth considering as an alternative.
Learn more about your current CD account options here.
The bottom line
A $100,000 3-year CD account can produce a return for savers worth more than $13,620 and potentially more than $14,100, depending on the interest rate they can secure this month. That noted, savers who want to lock in the highest rate possible are encouraged to both shop around for banks, especially, consider the use of an online institution, specifically, which tend to offer more competitive options than banks with in-person locations.
