Why You Should Put $1,000 Into a CD Today

A $1,000 deposit into a CD can earn you more money than you might think. Learn why you should open a $1,000 CD today and how much you can earn.
Written by Anna Baluch
Financial Expert
Managing Editor
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You should consider a CD if you have $1,000 to invest. With a CD, you can enjoy guaranteed returns and maybe earn more interest than in a high-yield savings account.

Let’s dive deeper into how much you may earn with a $1,000 CD investment.

What’s the Difference Between a CD and a Savings Account?

You can use a savings account to save money for various financial goals. Unlike a checking account designed for daily spending, a savings account may come with limited withdrawals. Typically, you’ll keep money in a savings account for a while and earn interest at a variable rate.

A certificate of deposit (CD) is an alternative to a savings account. Compared to a savings account, it usually requires a higher balance. Also, you’ll need to hold your funds in the CD for a fixed period or term. Otherwise, you might have to pay an early withdrawal fee.

In addition, a CD’s rate is often fixed, meaning it will stay the same over the term of your account. Accessing money from a savings account is easier than a CD account, but a CD may offer higher yields.

Which Banks Have the Best CD Rates?

Many banks offer CDs, and there’s fierce competition among them to offer the best rates. We’ve compiled a list of some of the best CD accounts to help you find the ones that best fit your financial goals.

Benefits and Drawback of $1,000 CDs

Before you move forward with a $1,000 CD, consider these benefits and drawbacks.


  • Higher Rates: CDs typically earn higher rates than savings accounts at most banks. Plus, your rate will remain fixed and stay the same, even if the market rates fluctuate.
  • Insured Deposits: The Federal Deposit Insurance Corporation (FDIC) insures CD accounts. Your money will remain safe even if the bank fails.
  • Easier to Save: Since most CDs won’t allow you to access your funds before the maturity date without paying a penalty, they can make saving easier. You’ll be more likely to resist the temptation to spend.
  • Many Options: Almost all online and brick-and-mortar banks offer CDs. You shouldn’t have any issues finding one that meets your needs.
  • Low Minimum Deposit: Depending on the financial institution, you can open a CD with $1,000 or even less.


  • Early Withdrawal Penalties: Traditional CDs come with early withdrawal penalties. You’ll pay a fee if you withdraw your funds before your CD term ends.
  • May Earn Less If Rates Increase: Unless you choose an adjustable rate CD, you’ll lock in your interest rate. If market rates go up, you might miss out on some money.

Why Are CDs a Good Idea Right Now?

A CD could make sense if you have $1,000 to invest. Here’s why.

Safe Investment

With a CD, you can enjoy guaranteed returns. As long as you keep your money in the CD for the entire term, you won’t have to worry about volatility like you would with traditional investments like stocks and bonds. You can do the math beforehand and calculate how much you’ll earn.

Higher Rates

A CD is worth considering if you want to earn more interest. You’ll likely lock in a higher interest rate than you’d be able to with a traditional savings account. Shop around to find the best rate for your needs.

Low or No Fees

While every financial institution is unique, most offer CDs with low or no fees, like account opening and monthly maintenance fees. This means you can put more money toward your investments.

Different Maturity Dates

When a CD term ends, it will reach maturity, and you’ll receive the money plus the interest you earned. You can choose the best maturity date for your particular savings goal. Typically, there will be a grace period of about one to two weeks, so you can withdraw your money without paying a penalty.

Fixed Rates 

While adjustable-rate CDs do exist, most CDs have fixed rates. Your money can grow without any fluctuations that are tied to the market.

Why It Pays to Shop for CDs

CDs are not created equal. There are countless options on the market.

Because each financial institution sets its CD rates, it pays to shop around. Doing so can lock in a competitive interest rate and maximize your earning potential.

Here’s a look at what might happen if you invest $1,000 in a 2-year CD with an average interest rate vs. a competitive one.

Currently, two-year CDs earn a national average APY of 1.59. If you open a CD that earns 1.59% and deposit 1,000, it would be worth $1,032.05 after two years, as shown below.

If you do your research and go with a bank that offers a competitive CD rate over one that only offers the national average rate, you’ll earn much more. Let’s say you invest $1,000 in a two-year CD that earns a 5.2% interest rate. You’d have $1,106.70 when the CD matures.

Short Term CDs vs. Long-Term CDs

Most banks and credit unions offer both short-term and long-term CDs. Short-term CDs usually come with terms of one year or less, whereas long-term CD terms are typically four years or longer.

While short-term CDs allow you to access your funds sooner, long-term CDs are known for higher interest rates. In general, a longer CD term means a higher interest rate.

As you can see from the table below, you’ll enjoy higher returns if you invest $1,000 in a CD but opt for a long-term of 48 months instead of a short-term of 3 months.

A short-term CD may make sense if you want to free up cash more frequently. But if you hope to lock in higher guaranteed returns and know you won’t need the money before the CD matures, a long-term CD is likely your best bet.

Banks Offering High-Yield CDs You Can Open with $1,000

If you’re ready to invest $1,000 in high-yield CDs, here are several banks to consider.


Marcus offers traditional, no-penalty, and rate bump CDs with rates well above the national average. You can open one in minutes with as little as $500. With a traditional CD, you’ll have access to your funds at maturity.

A no-penalty CD means you can withdraw your money before your CD matures without paying a penalty. A rate bump CD guarantees you’ll enjoy a higher rate if Marcus raises the rate for your particular CD term.

Pacific Western

At Pacific Western, you can find a variety of CDs with very attractive interest rates. You may choose from a 5-month, 7-month, or 13-month CD. Note that the highest rates are reserved for 13-month CDs, so if you can keep your funds tied up for a little over a year, the 13-month CD is the way to go.

U.S. Bank

Compared to other banks, U.S. Bank offers lower rates on its CDs. But it might be an option if you prefer a CD from a bank with many brick-and-mortar locations. If you don’t mind online banking, there’s a good chance you can land a much higher rate on a CD from an online or smaller bank. U.S. Bank CDs require a $1,000 minimum deposit up to a $250,000 maximum.

Chase Bank

Chase is another bank with CD rates that are lower than average. If you’re already a Chase customer, you may be able to get a better rate on a 3-month, 6-month, or 12-month CD. The minimum deposit for Chase Bank CDs is $1,000.

The Bottom Line

Interest rates should be top of mind if you’re interested in a $1,000 CD.

While you can settle for a CD with an average interest rate, finding one with a competitive rate is in your best interest.

Take the time to shop around and compare your options to zero in on the best CD for your situation.

Also, make sure the bank you go with accepts deposits of $1,000 or less, as some financial institutions require more money for their CD products.

About Author
Anna Baluch
Anna Baluch is a personal finance writer and expert who writes about financial topics ranging from personal and student loans to mortgages, debt relief, auto financing, and budgeting. As a contributor to MoneyRates, Anna’s insights are backed by her hands-on experience, exemplified by her achievement of paying off her mortgage in just 16 months, a journey she shared on the “Burn Your Mortgage” podcast in 2019. Her knowledge and expertise have appeared on personal finance platforms such as LendingTree, Business Insider, Credit Karma, Experian, American Express, Rocket Mortgage, U.S. News & World Report, and Policygenius. Anna is dedicated to guiding consumers toward making informed financial choices.
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