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How much interest can I earn in 6 months with high CD rates?

September 29, 2016

By Richard Barrington | MoneyRates.com Senior Financial Analyst, CFA

Q: I have $7,000 I can deposit and not touch for 6 months. What's the highest interest rate I can get?

A: The most likely case is that you could invest this in a 6 month CD, but that may depend on the details of your situation.

Finding the best CD rates

At the time of this writing the average 6 month CD rate nationally is 0.13 percent, according to figures from the FDIC. That would produce about $4.55 in interest on $7,000 over the course of six months. That doesn't sound very exciting does it? Fortunately, there are better options for short term CDs.

At the same time the national average for 6 month CD rates was 0.13 percent, the MoneyRates.com CD rates page showed a number of options in the 0.80 to 1.00 percent range. These would increase your interest earned by more than six times.

To find the best CD rates currently, go to that rate page and enter the appropriate CD term and size for your needs. The page will display a number of appropriate options and the rates associated with them.

Questions to ask before choosing a 6 month CD

Before assuming that a 6 month CD is the right vehicle for your needs, consider the following questions:

1. Will I need access to the money earlier?

Be aware that if you have a need for the money before the CD matures, you will likely have to pay a penalty to access it. If this seems a likely occurrence, you might be better off in a savings account or money market account that allows more immediate access. At the very least, you should check the early-withdrawal penalty before signing up for a CD.

2. What are my financial needs beyond six months?

You mention that you won't have to touch this money for six months, but at that point will you need all the money? If not, you may want to put enough in a 6 month CD to meet your needs at that point, and put the remainder of your money in a deposit after looking at long term CD rates to earn a higher yield.

How to maximize interest earned with high CD rates, savings accounts

Once you decide on the deposit approach that suits your needs, you should go through the type of search process described previously.

Split money between different accounts

If you decide to split your money into multiple vehicles, keep in mind that you don't necessarily have to keep each account at the same bank. Different banks may offer the best CD rates for specific term lengths, and the bank with the best CD rate may not necessarily have the best rate for savings accounts.

Research the highest savings rates

Shop around, and place each deposit where it can do the most for you.

As low as interest rates are, you are smart to search for the best option even if it turns out to be only for six months. Wealth is rarely accumulated in a hurry. Generally, building wealth is a more gradual, step-by-step process. Attention to detail at each step of the way will make the journey more rewarding in the long run.

Got a financial question about saving, investing, or banking? MoneyRates.com invites you to submit your questions to its "Ask the Expert" feature. Just go to the MoneyRates.com home page and look for the "Ask the Expert" Box on the lower left.

More from MoneyRates.com:

Long term CD rates

How to compare CD rates

Compare savings accounts, money market accounts and CDs

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