How much interest you’d earn by investing $10,000 in a 1-year CD

Growing your savings account balance can be a challenge if you’re new to the savings game, have had conflicting financial obligations, or have had a hard time making regular contributions to your savings account.

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But the good news is there are ways to boost your savings by making tweaks to your savings strategy, like where you choose to park your money.

Certificates of deposit (CDs) are one option for growing your savings substantially and holding yourself accountable to your savings goals. Although these accounts work a bit differently than traditional savings accounts, savers stand to earn greater interest on their balances—especially in a high-inflation environment.

How a $10,000 deposit could grow over time

When you open a CD, you’re committing to making an initial deposit into your account and leaving that money in your account for the duration of your CD term. This term could be as short as one month, or as long as 10 years. Making a withdrawal from your CD before the end of your term will likely result in an early withdrawal penalty (usually a portion of or all of the interest earned on your balance). Not all CDs will charge a penalty, certain CDs like a no-penalty CD will not penalize you for an early withdrawal.

Right now, the national average rate for a 1-year CD is 1.54%. However, there are many 1-year CDs that offer APYs above 4% and 5%.

“CDs come with a wide range of possibilities and can open financial doors depending on your future goals and financial needs,” says Chris Moore, Director of Deposits and Payment Strategy at Alliant Credit Union. “We're seeing CD interest rates higher than in years past, so it's a great opportunity for consumers to diversify their financial portfolios while receiving financial payouts exceeding what typically come from savings accounts.”