How Much $1,000 Could Earn in a CD

How Much You Can Earn With a $1,000 CD

With today's average one-year CD rate of 2.5%, according to Curinos data, you could earn $25 in interest on a $1,000 CD. A five-year CD with an average rate of 1.96% increases your earnings to $101.92 (over five years). While the average one-year CD rate is 2.5%, some banks offer competitive rates to attract customers. Many of Experian's best CD rates currently offer yields of over 4%. That rate would grow your interest to $40 within a year.

^*Source: Curinos LLC, July 2025

Learn more: Short-Term vs. Long-Term CDs: Which Is Best for You?

Estimate Your Earnings on Any One-Year CD

To estimate how much you would earn on any one-year, $1,000 CD, multiply the annual percentage yield (APY) by 1,000, then divide by 100. If you have the interest rate and not the APY, try a savings calculator to estimate your earnings using compound interest.

Benefits of a CD vs. Savings Account

CDs have a few key benefits compared to other savings options, such as traditional and high-yield savings accounts. All three of these savings types are safe, with virtually no risk of losing value, as more speculative investments like stocks or cryptocurrencies might. Between a CD versus high-yield savings or traditional savings account, a CD has these unique benefits:

• High interest rates: Many CDs offer much higher interest rates than traditional savings accounts and often pay as well or better than high-yield savings accounts.
• Guaranteed returns: Traditional and high-yield savings accounts pay variable interest rates that can fluctuate as economic benchmarks like the federal funds rate change. CDs pay a guaranteed rate you can lock in for the life of the account.
• Incentive to stay invested: Although early withdrawal penalties can make CDs less flexible than savings accounts, they also provide an incentive to leave your savings untouched.

Are CDs Safe?

CDs are exceptionally safe. Not only are your returns guaranteed, but your funds are insured against bank failure by the Federal Deposit Insurance Corp. (FDIC). Credit union members are similarly insured by the National Credit Union Administration (NCUA). In the unlikely event that your bank closes its doors, the FDIC will reimburse your funds, typically within days. In both cases, your funds are guaranteed up to $250,000 per depositor, per institution and per ownership category.

Top Strategies to Maximize CD Earnings

If you're going to keep your money in CDs, consider these strategies to make the most of your money.

Find the Top CD Rates

CD rates can vary greatly from one financial institution to the next. If you're going to invest in a CD, it's usually worth a little comparison shopping. You may be tempted to open a CD at the bank you already do business with, but you may be leaving money on the table if you don't seek out the best rate from other banks, credit unions and online banks.

Lock In a High APY

CDs let you lock in your APY when rates are high. If you (or your favorite economic forecasters) think interest rates may be heading lower in the months or years to come, putting at least some of your money in a fixed-rate CD helps you enjoy today's APY even when interest rates drop in the future.

Ladder Your CDs to Diversify

Predicting how interest rates may fluctuate isn't foolproof, especially over time. To hedge your bets, consider creating a CD ladder: Divide your total investment into four or five parts, then put each part into a CD with a different term. For example, split a $40,000 investment into four $10,000 CDs that mature in one, two, three and five years. You'll invest your money at four different interest rates, and you'll have a CD maturing almost every year, in case you need funds or want to invest elsewhere.

Learn more: How to Open a CD Account

Put More Money Into CDs

If you have substantial savings, consider putting more of your money into CDs versus other types of savings, to maximize the amount of interest you earn and lock in a guaranteed rate. On the other hand, don't overdo it. Historically, other investments, like stocks, have out-earned CDs over the long term. Investing at least some of your funds more aggressively may help ensure your money keeps up with inflation.

The Bottom Line

CDs are a safe, stable place to park your money—and earn a competitive APY for your trouble. Although the money you stand to earn on a $1,000 CD won't be enough to retire on, it beats what you might earn in traditional savings, and it multiplies as your investment multiplies.

If you're considering CDs, take the time to search for the best rates. Over time, small improvements add up to significant returns.