As ideal as long-term protection on your money can be, sometimes it’s not even what’s needed. And, if you use a certificate of deposit (CD) account, it can even be detrimental as savers will need to sacrifice access to their funds to earn one of today’s elevated rates. Withdraw the funds before the account matures and you’ll get stuck paying an early withdrawal fee as a result. But what if the protection being offered here was just temporary, such as six months? And what if the return could be worth thousands of dollars in the interim? That could be the reality for savers looking to temporarily shift a large, six-figure amount such as $150,000 into a 6-month CD right now.
Interest rates on 6-month CDs are competitive currently and, like all CD accounts, they’re fixed, allowing savers to budget with certainty by knowing precisely how much interest they’ll have earned once the account matures. That’s something that variable-rate alternatives like high-yield savings and money market accounts can’t provide. A traditional savings account, too, has a variable rate that’s currently comfortably listed below 1%, making it a nonstarter in today’s economic climate. That’s especially true when CDs offer exponentially higher rates.
But how much interest can a $150,000 6-month CD actually earn savers now? That’s what we’ll calculate below.
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Here’s how much interest a $150,000 6-month CD can earn savers now
CD interest rates vary both by term (or length of the account) and the bank. This is why shopping around for accounts is so important; otherwise, you could wind up locking your money into an account with a below-average return. Using three of the top readily available 6-month CD interest rates, here’s how much interest savers can expect to earn with a $150,000 6-month CD opened now:
- $150,000 6-month CD at 4.00%: $2,970.59 upon account maturity
- $150,000 6-month CD at 4.15%: $3,080.86 upon account maturity
- $150,000 6-month CD at 4.20%: $3,117.60 upon account maturity
Savers can expect to see a return ranging from $2,971 to $3,118, approximately, with a $150,000 6-month CD account that’s opened this September. And while they can potentially earn more money by investing this amount in stocks, they can also easily lose it.
That’s simply not a possibility with a CD, making it an attractive, albeit temporary, home for your money now. Then, in six months, if the economic climate has changed, you can shift your approach at that point and you can do so with an amount of money worth thousands of dollars more.
Get started with a CD account online today.
The bottom line
A CD account worth $150,000 isn’t for everyone and it isn’t always advisable when there are other, more profitable ways to invest that much money. For some short-term protection in today’s inflationary environment, however, it can be worth serious consideration, especially knowing that you’re positioned to earn a guaranteed return worth around $3,000 (or $500 per month) once the account matures in March. Just be sure to thoroughly review your options before committing to any bank and don’t dismiss the advantages online banks offer now as they’re frequently able to offer better rates and returns than their in-person counterparts.
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