How much interest will a $25,000 2-year CD earn if opened this August?

Inflation has eased slightly over the past month, but that hasn't made the path forward for interest rates any clearer. While the June inflation report came in cooler than expected, with annual , down from a rate of 4.2% the month prior. Despite that improvement, though, Federal Reserve Chair Kevin Warsh has continued to signal that the central bank won't rush to cut rates until it's convinced inflation is firmly under control. That disconnect has left many savers trying to figure out how much longer today's elevated deposit rates will last.

For savers with hefty amounts of cash to deposit into an interest-bearing account, that uncertainty can lead to difficult decisions. After all, if you wait too long to lock in a certificate of deposit (CD), the best rates available today could disappear over time if the Fed reduces rates. Lock in now, though, and you could miss out if inflation ticks back up and rates rise, or higher rates stick around longer than expected. In other words, the window to secure high CD returns may not stay open indefinitely.

That's why 2-year CDs have become an appealing middle ground. These types of CD accounts allow savers to lock in today's relatively high yields for longer than a short-term CD without committing their money for an extended period. But how much could a $25,000 deposit actually earn in a , and how does that compare to leaving the money in a savings account?

How much interest will a $25,000 2-year CD earn if opened this August?

Right now, the top available rates on 2-year CDs range from roughly 4.10% to 4.30% APY, depending on the institution. Here's what a $25,000 deposit would generate by maturity at each of those rates, assuming the funds stay untouched for the full CD term:

$25,000 2-year CD at 4.30%:$2,196.22 in interest
$25,000 2-year CD at 4.25%:$2,170.16 in interest
$25,000 2-year CD at 4.15%:$2,118.06 in interest
$25,000 2-year CD at 4.10%:$2,092.02 in interest

The spread between the top and bottom rate amounts to just over $104 over two years, but it's still a reminder that shopping around before opening any CD account is worth the extra time and effort. And unlike a savings account, that rate won't change once the CD is funded. Whatever CD rate is secured this August is the rate that applies throughout the entire term, regardless of what the Fed decides to do at its remaining meetings this year or next.

That certainty is the core appeal of a CD in today's unusual landscape. If the Fed does start cutting rates in the future, savers who lock in a 2-year CD rate now would continue earning today's higher rate even as new CD offers and savings yields decline around them. The trade-off, of course, is that if rates were to climb instead, that fixed rate would prevent a saver from capturing any of the upside without paying an early withdrawal penalty to withdraw their funds.

Can you earn more with a savings account at today's rates?

It's unlikely that you can earn more with a savings account in this landscape, at least not with a traditional savings account, anyway. The national average savings account rate currently sits at just 0.38% APY, a fraction of what even the lowest 2-year CD rate above would pay. On a $25,000 balance held for two years at that average rate, the return comes to just $190.36 — over $1,900 less than what the same deposit would earn in a 2-year CD at 4.10%.

A high-yield savings account narrows that gap considerably, since many of those accounts pay yields close to what CDs offer today. But even then, savings account rates are variable, meaning they can be cut at any point the bank chooses, particularly if the Fed does move toward lower rates later this year. Savers with CD accounts wouldn't feel that change until their term ends, while a savings account holder could see their yield drop within days of a rate announcement.

The bottom line

At today's top rates, a $25,000 deposit in a 2-year CD opened this August stands to earn between roughly $2,092 and $2,196 by the time it matures, compared to under $200 in a typical savings account over the same stretch. With the Fed's next moves still uncertain and top CD rates unlikely to hang around indefinitely, locking in a rate now offers a way to protect today's returns regardless of where policy heads next. The main condition is being comfortable leaving that $25,000 untouched for the full two years, since early withdrawal penalties can quickly erode the advantage a CD offers over more flexible options.