While borrowers have struggled in the last two years thanks to elevated interest rates on everything from mortgages to credit cards, savers have been able to take advantage by opening select account types. 

Rates on high-yield savings and certificates of deposit accounts, for example, have surged, allowing savers to earn exponentially more than they would have if they opened the same account in 2020 or 2021. While both accounts have unique benefits, the rates on CDs are generally a bit higher and they’re more secure because they’re locked for the CD’s full term. That’s a unique advantage in any environment, but especially in today’s evolving rate climate.

That said, rates are unlikely to stay this high forever, making now a smart time to lock in today’s elevated rates for the long term with a multi-year CD term. Before doing so, however, savers should know exactly what they stand to earn so that they don’t wind up tapping into their funds prematurely and get stuck paying an early withdrawal penalty. To that point, below we’ll break down exactly what a 5% CD interest rate will earn savers over the next three years.

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Here’s what a 5% CD interest rate will earn you in 3 years

When trying to calculate CD rate interest it’s important to understand one basic fact: The more you deposit, the more you’ll earn back in returns. But savers should also understand that not all accounts are created equally so it pays to shop around to find lenders offering the best combination of high rates and little (or no) fees. 

While a 5% CD interest rate on a long-term CD sounds appealing, for example, a little research could come up with similar accounts offering rates up to 5.25%. That can be a major difference when added up over 36 months.

That all being said, here’s what a 5% CD interest rate will earn you in three years, calculated by a variety of deposit amounts:

• $500 deposit: $78.81 for a total of $578.81 after three years
• $1,000 deposit: $157.63 for a total of $1,157.63 after three years
• $2,500 deposit: $394.06 for a total of $2,894.06 after three years
• $5,000 deposit: $788.13 for a total of $5,788.13 after three years
• $10,000 deposit: $1,576.25 for a total of $11,576.25 after three years
• $15,000 deposit: $2,364.38 for a total of $17,364.38 after three years
• $20,000 deposit: $3,152.50 for a total of $23,152.50 after three years

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The bottom line

As the above figures demonstrate savers can position themselves to earn substantial returns for years to come, regardless of what happens to the overall rate climate. But time may be running out to earn today’s great rates. If inflation continues to drop and interest rates soon follow, the returns on these accounts won’t be as beneficial, no matter the length of the CD term. That’s why it makes sense to take advantage now with a long-term, three-year CD. Just make sure to deposit the right amount with the right lender to avoid having to withdraw your funds early and, thus, causing you to lose the major benefit of this unique type of savings account.