economy
$40,000 6-month CD vs. $40,000 1-year CD: Which will earn more interest now?
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TL;DR
- Interest rates on short-term and long-term CDs are currently similar, but growth potential differs.
- A $40,000 6-month CD at 4.10% APY earns $811.76.
- A $40,000 1-year CD at 4.11% APY earns $1,644.00, $832.24 more than the 6-month CD.
- The higher earnings on the 1-year CD are due to the longer interest-earning timeline, not a significantly higher rate.
- Savers must weigh potential returns against the need for fund flexibility, especially in an inflationary environment.
- Online marketplaces simplify comparing CD rates, terms, and banks.