Have $100,000 in Cash? Here's How Much an 18-Month Jumbo CD Will Earn You
This approach helps you earn thousands of dollars effortlessly. But is the timing right?
You've come into some cash, or you're looking to allocate some money away from the rollercoaster of market volatility as you approach retirement. So, where do you place it?
If you're looking to store significant cash (think $100,000), a smart solution can be a jumbo CD. Jumbo CDs come in a variety of terms to match your savings goals. And with competitive APYs, you can earn thousands of dollars effortlessly.
I'll show you how much you can earn with the best jumbo CD rates and whether now is the right time to lock one in.
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How much can I earn with an 18-month jumbo CD?
I review CD rates regularly and have found that jumbo CDs consistently offer some of the highest APYs. CreditOne Bank offers an 18-month CD with a 4.50% APY and no monthly account fees.
If you deposit the minimum $100,000 into this CD, you'll earn $6,825.38 effortlessly over just a year and a half.
Of course, this term might not suit your timeline. Jumbo CDs carry early withdrawal penalties. For larger cash balances, breaking a CD early can mean losing thousands of dollars in interest.
If you want to earn a higher rate but don't want to tie up your cash for that long, use this Bankrate tool to find a term that matches your needs:
Another factor to consider is that CDs have fixed interest rates. This means that even if the Federal Reserve hikes rates during your term, your APY will remain unchanged.
Is the timing right for a longer-term CD?
The Fed is unlikely to make a move at its October meeting. The same doesn't apply for the December meeting, especially if sticky inflation remains.
This means if the Fed hikes rates again, you could miss out on a higher APY. With that significant a deposit, you'll lose out on hundreds of extra dollars.
An alternative is to look for a shorter-term option (ideally six months) for now. This positions you to earn a high APY now, and when the CD matures, you could earn an even higher APY.
However, if you don't want to chase rates and want a guaranteed return on your cash, the 18-month jumbo CD from CreditOne Bank checks all the boxes.
Don't forget to plan for this
CD earnings are taxed as ordinary income, so your marginal tax rate applies to your yield. A financial adviser or accountant can help you plan accordingly.
As Dat Ngo, CPA at Vetted Prop Firms, notes: "One thing savers often miss when comparing jumbo CDs to high-yield savings accounts is the tax timing. With a CD, you typically owe income tax on interest in the year it's earned — even if the term hasn't matured yet — so a multi-year CD on $100k can create a recurring tax bill you weren't budgeting for."
What are the best reasons to use a jumbo CD?
Some of the best options include:
- You have a shorter-term savings goal: Whether you're planning a dream vacation, want to pay in cash for home remodels or have your eyes on another expense, 18 months can be the sweet spot to make some money and achieve these goals.
- You're retiring soon or are retired: You want to protect some of your hard-earned money from risk while earning a guaranteed return.
- FDIC Insurance: FDIC-insured banks are generally covered up to $250,000 per depositor, per insured bank, for each account ownership category. That protection can make CDs an attractive place to hold a large cash balance while earning a guaranteed return.
No matter your financial strategy, jumbo CDs offer a compelling blend of security and competitive yields. Locking in a top-tier APY now puts your money to work safely —maximizing your returns without the risk.
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