The Federal Reserve may have lowered the federal funds rate last week, but CD and savings rates are still high. If you want to earn an extra $2,000 over the next 12 months, deﷺpositing money into a CD may help you reach this goal. Consider it like a side hustle, except your money ♚grows while you do nothing.

In the next 12 months, there’s a real possibility that the Fed will lower rates. JP Morgan strategists believe that there will be two more rate cuts in 2024, with even more in 2025. And according to the 澳洲幸运5开奖号码历史查询:CME Group's FedWatch Tool, 61% of interest rate traders are currently betting that the Fed will cut rates by another 50 basis points in November.

If that happens, CD and savings rates will follow suit and also drop. Locking in a high-paying CD now can help you enjoy 5.00% interest rates for longer, even if other rates drop. Plus, CDs require lꦗittle effort and are considered low-risk investmen🐻ts.

How Much Money Do I Need to Deposit in a CD to Make $2,📖000?

Let’s say you wꦉant to open a 1-yearℱ CD with an interest rate of 5.04% APY. Considering this rate, let’s break down how much money you’ll need to deposit to make $2,000 in 12 months.

To earn $2,000 in a 澳洲幸运5开奖号码历史查询:12-month CD with a 5.04% APY, you’d need an i🧜niti🧸al deposit of precisely $39,683.

If you don’t have $39,683 in cash to deposit into a CD right now, you can still open a CD with a smaller amount of money instead. For example, if you ⛦deposit $14,105 in a 3-year CD with an interest rate of 4.52%, you’d earn approximately $2,000 in interest by the end of 36 months.

And if you’re willing to settle for any amount of interest, locking in the 澳洲幸运5开奖号码历史查询:nation-leading CD rate of 5.20% from ableBanking🐠 could earn you $128 in interest after just six months with a $5,000 deposit.

It’s always better to start small and save or invest than do nothing at all. Here’s what earning $2,000 in a CD could look like with different CD rates and terms, and different🐼 initial deposits:

If you’re starting out with smaller amounts, consider a 澳洲幸运5开奖号码历史查询:CD ladder. This strategy can give you access ✃to higher rates whi𒁏le also ensuring some of your money is available to withdraw every year.

To build a CD ladder, follow these steps:

1. Take the amount of money you want to invest in CDs and divide it by five. Let’s use the example of $39,683 from earlier.
2. Put one-fifth of the funds into a top-earning 1-year CD, another fifth into a top 2-year CD, another into a 3-year CD, and so forth through a 5-year CD. That’s about $7,937 per CD.
3. When the first CD matures in one year, you take the resulting funds and open a top-rate 5-year CD.
4. One year later, your initial 2-year CD will mature, and you'll invest those funds into another 5-year CD.
5. Continue doing this every year with whichever CD is maturing until you end up with a portfolio of five CDs all earning 5-year APYs, but with one of them maturing every 12 months, keeping your money a bit more accessible than if all of it were locked up for a full five years.

Can ๊You Make $2,000 in a High-Yield Savings Accou൩nt?

You might be wondering if you can deposit enough money into a high-yield savings account and earn the same $2,000 interest over 12 months. The shor🌺t answer? Yes, it’s possible.

High-yield savings accounts and CDs function similarly in that they both pay an annual percentage yield (APY) on your deposited funds. However, the main difference between a high-yield savings account and a CD is that the APY is variable. The 澳洲幸运5开奖号码历史查询:best high-yield sav♊ings account rate today is 5.50% APY.

While this rate is 30 basis points higher than the best nationwide CD rate currently available (5.20% APY), rates on high-yield saviꩲngs accounts will likely also dip as the Federal Reserve continues to slash rates. Choosing a CD instead is better if locking in a high interest rate is your top priority. However, you’ll typically incur fees and penalties if you withdraw funds from a CD before it matures. In some cases, this can mean you’ll forfeit all interest earned.

Should You Open a CD Right Now?

If you’re wondering whether you should open a CD right now, the answer is yes. The Fed is done hiking rates like it did through 2023 to tame inflation (which is now much closer to its target of 2%). And with more rate cuts on the horizon for November, December, and 2025, you can expect CD interest rates to fall. If you want to earn passive income in a CD for as long as p🐎ossible and you’re OK with not having access to your funds for a determined period, opening a CD today is a smart move.

How We Find the Best CD Rates

Every business day, Investopedia tracks the rate data of more than 200 banks and credit unions that offer CDs to customers nationwide and determines daily rankings of the top-paying certificates in every major term. To qualify for our lists, the institution must be federally insured (FDIC for banks, NCUA for credit unions), the CD's minimum initial deposit m𝓡ust not exceed $25,000, and any specified maximum deposit cannot be under $5,000.

Banks must be available in at least 40 states. While some credit unions require you to donate to a specific charity or association to become a member if you don't meet other eligibility criteria (e.g., you don't live in a certain area or work in a certain kind of job), we exclude credit unions whose donation requirement is $40 or more. For more about how we choose the best rates, 澳洲幸运5开奖号码历史查询:read our full methodology.