This Is How Much Money You Can Make With $20K in a 5-Year CD
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There's a huge variance in 5-year CD rates right now. On the high end, some top online banks are offering around 3.75% APY on a 5-year CD. That would mean roughly $4,000 in interest upon maturity with a $20,000 deposit.
But on the lower end, some banks are paying less than 1.00% APY. At that rate, your total earnings would be just over $1,000 -- even though your money is tied up for the exact same five years.
That's why CDs aren't a "set it and forget it" decision. If you're planning to park real money in a CD, it genuinely pays to shop around.
How much $20K can earn in a 5-year CD
A certificate of deposit (CD) pays a fixed APY for a set term. That means you know exactly how much your money will earn if you left it untouched for the entire term.
Here's what $20,000 looks like in a 5-year CD at different rates:
| APY | Total Interest Earned |
|---|---|
| 1.50% | ~$1,560 |
| 2.50% | ~$2,630 |
| 3.50% | ~$3,740 |
| 3.75% | ~$4,030 |
Right now, the national average APY for a 5-year CD is just 1.34%, as many big banks are offering extremely low rates that drag the average down.
If you simply open a CD at the bank you already use, you might end up earning closer to $1,500. But if you shop around and land a rate near 3.50%-3.75%, you're looking at roughly $4,000 in interest instead.
If you're shopping around, Synchrony Bank is worth a look. It offers high CD rates across multiple terms and $0 minimum balance requirements. Check out our full Synchrony Bank CD review page for a full list of available rates and terms.
Why a 5-year CD works for patient savers
A 5-year CD is best for money you don't want to risk.
If you want a predictable return and already have a plan for this cash in about five years, a CD does exactly what it promises. You lock in a fixed APY and know, down to the dollar, what you'll earn.
And it's an especially great move in a rate-cutting cycle like the one we're in now. Savings and money market rates can drop as the Fed lowers core interest rates. But a CD lets you lock in today's higher yields before they are no longer available.
I also like 5-year CDs for the "no-stress" portion of savings. This isn't money you're trying to grow aggressively. It's money you're protecting while still earning a meaningful return.
What to keep in mind
CDs are simple, but they're not completely hands-off.
First, early withdrawal penalties matter. Most 5-year CDs charge several months or even up to a year of interest if you break the CD early. That's the trade-off for the higher fixed rate.
Second, inflation is the wildcard. A 3.50% APY feels great today, but if inflation spikes again, your real buying power could still get squeezed. CDs protect your dollars, not necessarily your lifestyle.
If flexibility matters more than certainty, a shorter-term CD or high-yield savings account might be a better fit.
Compare today's top savings and CD options side by side to see which is the best fit for you.
Our Research Expert
Joel O’Leary is a full-time Personal Finance Writer at Motley Fool Money, covering credit cards, bank accounts, investing, mortgages, and other personal finance topics. Joel has been writing about personal finance since 2018, previously leading editorial content for the How To Money podcast and serving as a resident writer at Budgets Are Sexy. He bought his first rental property at age 18, funding the down payment with savings from his high school job at McDonald’s -- a testament to his lifelong passion for smart money decisions. His work aims to make personal finance accessible and actionable for everyday readers. When he’s not writing, Joel enjoys surfing and spending time with his family.