A certificate of deposit pays you interest for agreeing not to touch your own money. This is the financial product equivalent of paying someone to hide your car keys.
The article promises to reveal how much ten thousand dollars earns in a top-earning one-year CD. Spoiler: it's whatever the interest rate is times ten thousand dollars. You just did complex mathematics.
CDs exist because Americans cannot be trusted to leave money alone for twelve consecutive months without buying something stupid. The bank recognized this character flaw and monetized it. Brilliant.
The piece calls this "a safe way to grow your money with a predictable return." Growing implies meaningful expansion. A houseplant grows. Your neighbor's tumor grows. Your CD generates enough interest to buy coffee twice.
Top-earning CDs currently pay around 4.5% annually. That's four hundred fifty dollars on your ten grand. Before taxes. After taxes you're looking at maybe three hundred bucks depending on your bracket. You just locked up ten thousand dollars for a year to earn what a teenager makes in two weeks at Dairy Queen.
But it's predictable. You know exactly how poor you'll stay.
The article exists because someone needed to write seven hundred words explaining multiplication to adults who self-identify as investors. These are the same people who will read this, nod thoughtfully, then ask their brother-in-law if he's heard about this CD thing.
Meanwhile actual interest rates could shift six times before publication. The "top-earning" CD mentioned today will be average by Tuesday. But don't worry. Someone will write another article telling you to calculate the new number.
The only thing safer than a CD is not pretending you're investing when you're just letting your money sit somewhere that pays slightly better than your checking account while inflation eats four percent of your purchasing power anyway.
Photo by Brett Jordan on Unsplash
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