If I put $1,000 on a 6-month CD that yields 5%, how much will I take out at the end of 6 months?

Question

Is it 5% of $1,000, or 5% of $1,000 each month for 6 months?

Answer 1

The 5% is an annual interest rate. Your yield depends a bit on how often the interest is compounded. If it is compounded monthly, then each month you will earn 5/12% or about .42% interest on the combined principal and accrued balance. Your balance at the end of the six months will be 1000*(1.42)^6 = $1025.26. You have earned a whopping $25.26!

Answer 2

Are you taking the interest monthly, or is it set up for compound interest? If you take the proceeds monthly, you will earn 5% of $1000 per month. If you compound the interest or roll it over, it will take the interest that you earned for that month and apply it to next months investment.
EX: If you earn $100 interest a month on a cd that you have for 12 months, you will have and extra $1200 a year that you are gaining interest on by rolling it over. Compounding means that you take the interest and reinvest to gain more interest. Making that cd worth more than when you started.
Taking payments out each month for interest earned means you will never earn more than the 5% of the $1000 that you invested, you'll make $50 per month.
Rolling that interest over through your one year term, you will make more money by reinvesting the interest on that $1000.

Answer 3

The 5% is "annual yield", in other words you would get 5% if you left your money in all year. You will get
approx. half of 5%, depending on the rate of compounding. A CD will always say " Compounded daily, monthly quarterly or yearly".

Answer 4

for six months not very lots better than what you put in, yet once you're taking it out after 6 months you will take a lost. circulate away it in for 60 months, and notice what you're able to have. NOW the question is, is the three.50% activity is consistent with month----consistent with quarter-----for six months or 12 months? it's going to make an excellent distinction on your earning.

Answer 5

Yields are usually quoted per year, so read the fine print. The yield is certainly not per month.

5% for six months is a very good rate. 5% per year is not that good.

Answer 6

You will get $25 interest for a total of $1025. 5% is an annual rate.

Answer 7

5% is the anual rate, so after 6 months you'll get about 25 dollars in interest

Answer 8

Its 5% of $1000 x (6months/12month)

Depending on whether its daily, monthly, or simple interest, it will be around $1025

Answer 9

$1025.26 is the answer, assuming compounded interest monthly at a 5% annual rate.

Answer 10

I think around $1200-1400