5-Year CD Calculator
Five years is the longest term most banks offer and the largest commitment in deposit banking. See the total interest, and what breaking it early would cost.
A five-year CD is a bet on rates, not a savings account
Every five-year certificate is a wager on where rates go. That wager is unusually cheap right now: take 4.50% for five years on $50,000 and you collect roughly $12,300 of interest, while rolling twelve-month CDs at 4.40% — assuming that rate never moves — collects about $12,000. Even before a single cut, the lock is about $300 ahead. Let the Fed cut twice so your renewals land at 3.90% and then 3.40%, and the rolls drop to roughly $9,950 while the lock wins by about $2,350. The bet only turns against you if rates rise from here. Same deposit, same five years, very different verdicts.
That is the whole decision. You are not picking a yield, you are picking which side of the rate path to stand on. With no view to work from — and most people should not have one — a five-rung ladder splits the difference and stops the bet being all-or-nothing.
The penalty is the part people underrate
Five-year CDs carry the harshest early-withdrawal penalties in deposit banking: commonly 365 days of interest, occasionally 540. Break a $50,000 five-year CD at 4.50% in month six, having earned about $1,100, and the penalty is a full year of interest at $2,250. Back comes roughly $48,850 — around $1,150 less than you deposited. This is the one product where the sign on your return can genuinely turn negative.
Two practical guards. First, never fund a five-year CD with money that stands any chance of being needed — the emergency fund and the no-penalty CD exist for that. Second, ask whether the bank offers a bump-up option, which lets you reset once to the current rate; over a five-year term that option is worth real money if rates rise.