If You Put $10,000 in a 1-Year CD Today, Here's How Much It Will Be Worth Next Year

Certificates of deposit (CDs) have a lot going for them right now. For one, they offer high annual percentage yields (APY) on multiple terms. Secondly, they can freeze these high rates for long periods, thereby allowing you to earn interest at a high rate even if ongoing CD rates drop later this year.

Don't miss that last point. Unlike high-yield savings accounts and money market accounts, which have variable rates, CDs can offer you guaranteed returns on your deposit.

This can make it easy for us to calculate how much you'll earn over the length of your CD term. As long as you know your CD rate and deposit amount, you can calculate how much interest your CD will generate.

So, how much could you earn in today's top-paying 1-year CDs? Let's take a look at some of the best CD offers and see.

Our Picks for the Best High-Yield Savings Accounts of 2024

Product	APY	Min. to Earn
American Express® High Yield Savings Member FDIC. APY 3.80% Rate info 3.80% annual percentage yield as of December 28, 2024. Terms apply. Min. to earn $0 Open Account for American Express® High Yield Savings On American Express's Secure Website. Member FDIC.	3.80% Rate info 3.80% annual percentage yield as of December 28, 2024. Terms apply.	$0	Open Account for American Express® High Yield Savings On American Express's Secure Website.
Capital One 360 Performance Savings Member FDIC. APY 3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings On Capital One's Secure Website. Member FDIC.	3.80% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Dec. 6, 2024. Rates are subject to change at any time before or after account opening.	$0	Open Account for Capital One 360 Performance Savings On Capital One's Secure Website.
Western Alliance Bank High-Yield Savings Premier Member FDIC. APY 4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY. Min. to earn $500 to open, $0.01 for max APY Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website. Member FDIC.	4.46% Rate info The annual percentage yield (APY) is accurate as of November 7, 2024 and subject to change at the Bank’s discretion. Refer to product’s website for latest APY rate. Minimum deposit required to open an account is $500 and a minimum balance of $0.01 is required to earn the advertised APY.	$500 to open, $0.01 for max APY	Open Account for Western Alliance Bank High-Yield Savings Premier On Western Alliance Bank's Secure Website.

You could earn up to $525 with a $10,000 deposit

If you were to put $10,000 into a 1-year CD, you could earn at least $500 if your CD has a 5.00% APY. With that in mind, here's how much today's top 1-year CD would yield after 12 months.

These calculations assume you're not going to draw interest from your CD account within the year. While some CD providers will let you withdraw earned interest periodically, doing so will affect your CD's APY. Since CDs grow by compound interest, the more money in the pot, the greater your overall earnings.

Speaking of withdrawals, I'm also assuming that you won't cash in your CD before your term is up. If you do, you'll pay an early withdrawal penalty that can wipe out your interest. Depending on your CD, the penalty may be severe enough to subtract from your initial deposit. In other words, you can lose money in a CD.

Finally, keep in mind that these calculations don't factor in federal and state taxes. Since CD interest is considered taxable income, the IRS will expect you to report it on your taxes. This will reduce your earnings, especially if you live in a state with a high income tax.

Should you open a 1-year CD to earn $500?

Although earning $500 isn't going to make you rich, it can be worth it for the safe investment and guaranteed returns that CDs offer. If your money is sitting in a low interest account or one that has a variable rate, moving it into a top-paying CD would help you maximize your earnings and keep pace with inflation.

Those with a longer time horizon, however, might be better served by investing in the stock market. While a CD can yield 5% over a one-year term, the S&P 500 has averaged an annual return of 10% over the last 50 years. If you invested $10,000 in the stock market for 30 years at that rate, your money would grow to over $170,000.

Of course, the stock market is risky, and you can lose money on a bad day. If stability is more important to you than a chance of higher growth, a CD might just be right for you. Take a look at some of the top CD offerings from multiple banks (and with multiple terms) and lock into a high APY before rates start to drop.