How much can a $500 CD account earn if opened this August?

CBS News

2 days ago

While $500 may not seem like a lot of money on paper, if you've been able to save it to the side without incurring any debt or sacrificing your financial health, that's still an accomplishment to be proud of. Considering the economic climate of recent years, in which inflation surged and borrowing costs rose alongside it, saving cash on the side has become increasingly difficult. Most Americans can't afford even a $1,000 emergency expense, a report released earlier this year claimed. So, saving $500, while not perfect, definitely helps.
Where you should store that money for safe-keeping, however, becomes a different concern, especially if you're hoping to earn a decent amount of interest on your funds. Certificate of deposit (CD) accounts could be a viable option worth exploring. Rates on these accounts are multiple times higher than they were a few years ago, and they're exponentially higher than what you're likely earning with a traditional savings account now (with an average rate under 0.40%).
Before rushing to put this money into a CD, however, it helps to know how much interest you stand to earn when the account ultimately matures. Fortunately, this is easy to do with a CD since the (high) rate it comes with is also fixed. So, how much can a $500 CD account earn if opened this August? Below, we'll do the math.
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Using the top readily available interest rates outlined by Bankrate, here's how much interest a $500 CD can earn now, based on the rates available for each term and on the assumption that no early withdrawal penalties are issued:
The interest-earning potential on a $500 CD that's opened now will be modest, regardless of the CD term length. However, that interest is guaranteed and predictable. That's a major advantage for savers now, especially with interest rate cuts looming for the fall (and, thus, lower returns on interest-earning vehicles like CDs).
Still, these are some of the better rates available, and you're likely to see rate offers even lower than these with a quick look around. So take the time to shop around to find accounts offering the highest rates and most attractive terms. That may even mean opening a CD account online versus with a physical banking branch.
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High-yield savings accounts come with interest rates just as high as many CD accounts do. The saver won't need to worry about access, either, as they're able to maintain a traditional cadence of deposits and withdrawals as they do with a traditional savings account.
That said, high-yield savings accounts have variable rates that are likely to change over time, making predictions about the interest-earning potential difficult to gauge with precision. But, if you're looking for a way to earn a high rate on your $500 and don't want to have to give up access to your money to get it, this could be an account type worth exploring this month.
A $500 deposit into a top CD account can earn savers between $6 and $113, approximately, depending on the term and associated rate. But with early withdrawal penalties substantial, especially for long-term CDs, and comparable rates available with high-yield savings and even money market accounts, savers should pause and evaluate all of their options before getting started. It may have taken hard work and sacrifice to save up $500, so take a bit more time to ensure that the place you keep it in is worth it for you, both this August and into the future.