A 5-year CD may not be the best option for short-term goals or emergency funds since you may need to pay penalties for early withdrawal. If you want to preserve and grow your funds, a long-term CD can be a good choice.īut, while long-term CDs are low-risk investments, they are not for everyone. Getting a 5-year CD can be worthwhile but it really depends on what your financial goal is. Here's a table to illustrate how much you earn:
With a higher APY and deposit amount, your potential earnings can be bigger. If you have $1,000 in a 5-year CD with a 3.5% APY, you can earn around $188 at maturity.
Since it is for the long haul, the effect of compound interest will be more profound, making 5-year CDs a sensible investment for long-term goals. In exchange, you also get a fixed rate that is usually higher than any regular savings account.ĥ-year CDs usually have higher rates because of the long-term commitment. How much interest does a 5-Year CD earn?Ī 5-year certificate of deposit (CD) is a deposit account where you lock in a fixed amount for a fixed 5-year term.
