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Before putting your money into any investment and before locking it away in a specific savings account, it’s first crucial to determine the potential opportunity, as well as the cost it may incur to accomplish your goals. While this is an important consideration no matter the sum of money in question, it becomes even more important to get right when working with a five or six-figure sum of money, especially in today’s unique economic climate.
For much of the last three years, a certificate of deposit (CD) account was a smart place to put your money, even if you were looking to deposit an amount like $20,000. With interest rates as high as 6% and 7%, savers could easily earn a substantial return on their money with no major risk.
But in the developing economy of early 2025, in which inflation is steadily increasing again and high interest rates courtesy of the Federal Reserve remain frozen, some may be wondering about the timely benefits of opening a $20,000 CD right now. Is a $20,000 CD still worth opening? While the answer to this question is ultimately specific to the saver in question, for many it still can be. Below, we’ll explain why.
See how much interest you could be earning by opening a CD here.
Is a $20,000 CD still worth opening?
Here are three reasons why a $20,000 CD can still be valuable, even in today’s different economic atmosphere:
You’ll earn thousands of dollars
The more you put into a CD, the more you’ll get out of it. And with a $20,000 deposit, there are multiple ways to earn a return of $1,000 or more. With an 18-month CD at a readily available 4.16% interest rate, you’ll earn $1,260.89 upon maturity while a 2-year CD at 4.15% will result in around $1,700 earned. If you extend the CD term further, you’ll earn even more interest. But the key is to shop around for rates and lenders — and strongly consider online banks, which tend to have much higher rates than banks with physical locations.
Start shopping for CDs online now.
You’ll protect your money in an uncertain climate
Hope was high last September that inflation was on a permanent downward trend, and the Federal Reserve contributed to that optimism with a larger-than-expected 50 basis point cut to its federal funds rate. Additional reductions there followed in November and December. But inflation rose during those months and again in January, resulting in a pause in rate cuts that may be extended further than many borrowers would prefer.
In this economic climate, savers would benefit from protecting a large portion of their money with a CD. Interest rates on these accounts are fixed, meaning the rate will remain the same despite any volatility during the CD term. And because rates are fixed, savers will be able to precisely determine how much they’ll earn upon account maturity, which is an attractive feature in a climate plagued by unknowns.
You’ll make up for lost opportunities
Sure, today’s CD interest rates aren’t quite as beneficial as they were this time last year. But if you didn’t take advantage then, you still can now, particularly with a $20,000 CD that will result in big money returns. You may still be losing money now simply by keeping your money in a traditional savings account, with an average rate of 0.41%. So don’t be overly concerned about missed high-interest-earning opportunities and take advantage now, while you still can. Just avoid keeping any money in an account that’s not even keeping pace with inflation.
The bottom line
It can be difficult to part with $20,000, especially in today’s economy. But for some savers, it could be worth moving it into a CD despite that difficulty. With CD rates still elevated, the potential to earn thousands of dollars in interest, protection against growing economic uncertainty, and the chance to make up for lost opportunities not exploited in recent years, a $20,000 CD can still make sense. Just be sure that you can afford to part with the money for the full CD term, no matter which length you ultimately decide on, to avoid having to pay an expensive early withdrawal penalty to regain access to your money.
