CDs Are Still Paying Close to 5%. Here’s How to Score a Much Higher Return on Your Money

This post may contain affiliate links which may compensate us based on your interaction. Please read the disclosures for more information.

[[{“value”:”Image source: Getty Images
There was a time not very long ago when it was pretty easy to find a CD with an APY of 5%. All you had to do was shop around for the best CD rates and choose one of several options.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. But ever since the Federal Reserve made its first benchmark rate cut in September, CD rates have been on the decline. So now, it’s harder to find a CD paying 5%.The good news, though, is that you can still get close. And while a 4.5% CD doesn’t have quite the same ring as 5%, it’s hardly a shabby return given that your money in a CD is protected as long as your bank is FDIC insured and your deposit is $250,000 or less.But while you may be eager to open another CD to earn close to 5% on your cash, there’s an even better option for money you have that you don’t expect to need in the near term. And it’s an option worth exploring as soon as possible.Don’t settle for close to 5%You may like the idea of earning almost 5% on your money in a CD. But how does 10% sound instead?Over the past 50 years, the S&P 500’s average annual return has been 10%, accounting for years when the market did wonderfully and years when it completely tanked. So if you put some of your money into a stock portfolio and leave it alone for many years, you may find that the return you snag far surpasses what even the top-paying CDs can offer you today.Now to be clear, investing in stocks is not a good idea if you expect to need your money within a few years. You need plenty of time to ride out market declines to make money in stocks without taking on undue risk. But if that’s the case, you may be surprised at how much better off you are putting money into a stock portfolio.Say you have $10,000 to work with. If you open a 12-month CD at 4.5%, you’re guaranteed to earn $450. After the one-year mark, who knows? By then, CDs could be paying 3.5%, or 3%, or less. And it’s pretty safe to say they won’t be paying 10%.On the other hand, let’s say you put $10,000 into a stock portfolio that gives you a yearly 10% return over 20 years. By the end of that window, you’re looking at a balance of a little over $67,000. That’s about a $57,000 profit.It pays to start investing as soon as you canYou may be inclined to open one more 12-month CD before rates start to fall from where they are today. But even that could hurt you if the money you’re talking about is cash you won’t need for many years.Imagine that instead of investing $10,000 in a stock portfolio paying 10% a year for 20 years, you only have 19 years to work with. In that case, you’re looking at growing your money to about $61,000, which is $6,000 less than the $6,700 you’d have by investing for a full two decades.So which would you rather do — earn $450 in a CD in the next year, or earn an extra $6,000 from a stock portfolio?If it’s the second choice, which it should be, instead of opening another CD, click here to open a brokerage account and start putting your money to work in the stock market immediately. You may find that it pays off big time compared to choosing a CD, even with rates close to 5%.Alert: highest cash back card we’ve seen now has 0% intro APR into 2026
This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!
Click here to read our full review for free and apply in just 2 minutes. We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.”}]] [[{“value”:”

There was a time not very long ago when it was pretty easy to find a CD with an APY of 5%. All you had to do was shop around for the best CD rates and choose one of several options.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

But ever since the Federal Reserve made its first benchmark rate cut in September, CD rates have been on the decline. So now, it’s harder to find a CD paying 5%.

The good news, though, is that you can still get close. And while a 4.5% CD doesn’t have quite the same ring as 5%, it’s hardly a shabby return given that your money in a CD is protected as long as your bank is FDIC insured and your deposit is $250,000 or less.

But while you may be eager to open another CD to earn close to 5% on your cash, there’s an even better option for money you have that you don’t expect to need in the near term. And it’s an option worth exploring as soon as possible.

Don’t settle for close to 5%

You may like the idea of earning almost 5% on your money in a CD. But how does 10% sound instead?

Over the past 50 years, the S&P 500’s average annual return has been 10%, accounting for years when the market did wonderfully and years when it completely tanked. So if you put some of your money into a stock portfolio and leave it alone for many years, you may find that the return you snag far surpasses what even the top-paying CDs can offer you today.

Now to be clear, investing in stocks is not a good idea if you expect to need your money within a few years. You need plenty of time to ride out market declines to make money in stocks without taking on undue risk. But if that’s the case, you may be surprised at how much better off you are putting money into a stock portfolio.

Say you have $10,000 to work with. If you open a 12-month CD at 4.5%, you’re guaranteed to earn $450. After the one-year mark, who knows? By then, CDs could be paying 3.5%, or 3%, or less. And it’s pretty safe to say they won’t be paying 10%.

On the other hand, let’s say you put $10,000 into a stock portfolio that gives you a yearly 10% return over 20 years. By the end of that window, you’re looking at a balance of a little over $67,000. That’s about a $57,000 profit.

It pays to start investing as soon as you can

You may be inclined to open one more 12-month CD before rates start to fall from where they are today. But even that could hurt you if the money you’re talking about is cash you won’t need for many years.

Imagine that instead of investing $10,000 in a stock portfolio paying 10% a year for 20 years, you only have 19 years to work with. In that case, you’re looking at growing your money to about $61,000, which is $6,000 less than the $6,700 you’d have by investing for a full two decades.

So which would you rather do — earn $450 in a CD in the next year, or earn an extra $6,000 from a stock portfolio?

If it’s the second choice, which it should be, instead of opening another CD, click here to open a brokerage account and start putting your money to work in the stock market immediately. You may find that it pays off big time compared to choosing a CD, even with rates close to 5%.

Alert: highest cash back card we’ve seen now has 0% intro APR into 2026

This credit card is not just good – it’s so exceptional that our experts use it personally. It features a 0% intro APR for 15 months, a cash back rate of up to 5%, and all somehow for no annual fee!

Click here to read our full review for free and apply in just 2 minutes.

We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
Motley Fool Money does not cover all offers on the market. Editorial content from Motley Fool Money is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

“}]] Read More