This Bank Offers a 100-Year CD That Pays 4.75%

Have you ever dreamed of leaving a lasting financial legacy to the future? Do you yearn for a constant rate of return that will continue long after you've shed this mortal coil? Well, if so, you should seriously consider reaching out to Walden Mutual Bank of Concord, New Hampshire, and ask about its 100-year Local Impact CD.

This CD locks your money in for 100 years to better enable Walden Bank to make long-term loans to the farmers it serves. It's a noble cause, to be sure, and deserving of the moniker "Local Impact," since that's exactly what it does -- it makes a huge impact on the area local to the bank.

Noble as it may be, a 100-year CD is a rare product. It offers an uncommon investment opportunity, but it also comes with some pretty serious restrictions and risks. Is it right for you?

Why would you choose a 100-year CD?

It makes a lot of sense to buy 1-year certificates of deposit right now, especially with interest running over 4.50% for a lot of products. You can get a solid return without doing anything but leaving your money alone -- which can be about the easiest thing to do. But for a 100-year CD, the impact of doing nothing is massive.

Our Picks for the Best High-Yield Savings Accounts of 2024

Capital One 360 Performance Savings APY 4.25% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening. Min. to earn $0 Open Account for Capital One 360 Performance Savings Member FDIC.	APY 4.25% Rate info See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of April 11, 2024. Rates are subject to change at any time before or after account opening.	Min. to earn $0
American Express® High Yield Savings APY 4.25% Rate info 4.25% annual percentage yield as of June 26, 2024 Min. to earn $1 Open Account for American Express® High Yield Savings Member FDIC.	APY 4.25% Rate info 4.25% annual percentage yield as of June 26, 2024	Min. to earn $1
Citizens Access® Savings APY 4.50% Min. to earn $0.01 Open Account for Citizens Access® Savings Member FDIC.	APY 4.50%	Min. to earn $0.01

Through the power of compounding interest, the minimum deposit for this product, $1,000, at the rate stated on the bank's website, 4.75%, will become $103,610.36 at maturity. In 2124.

For someone who is looking to create an endowment or leave a bunch of money to their grandchildren, this is definitely a product to consider. It's FDIC insured, just like your checking account, so if the bank does go under without transferring your CD to another financial institution, you'd get your money back.

According to the bank's website, you can also withdraw the interest that's accumulated at any given point in time, and multiple times, so it can function as a revenue stream for the rest of your life, and part of someone else's. Of course, if you take interest out, you won't make as much money because CDs pay compound interest, but that's a problem for your heir, isn't it?

How is Walden Mutual Bank capable of offering this CD?

So far, a century CD doesn't sound like such a bad deal -- it's stable, it's secure, and boy howdy, will it pay you forever. But if you think about it, there's a reason the bank is willing to give you such a solid rate of return for such a long period of time.

According to data from the Federal Reserve Bank of St. Louis, short-term CD interest rates have run more or less on par with the federal funds rate for pretty much forever. So, when you're considering the trade-off between the interest you might have earned if you'd built a CD ladder or something similar for those 100 years, the federal funds rate is a good place to start.

How has the federal funds rate trended over time?

Walden Mutual Bank has done the math, and it assumes that 4.75% is lower than what it would pay for similar CDs for the next 100 years, but does the history play out? The federal funds rate has only been tracked since 1954, so not quite a century, but it's as good as we'll get.

The average federal funds rate across all that time is about 4.6%, but that includes a period between January 2009 and November 2015 where the rate was as close to zero as you could get without hitting it, as well as a second, shorter near-zero interest rate period from April 2020 to January 2022. These are periods that many agree will not return unless the economy is in very bad shape, as it was during the Great Recession and the peak of the COVID-19 pandemic.

The federal funds rate has also been extremely high at times, with long runs over 5%, including the following:

• March 1968 to November 1970: the rate peaked at 9.19%
• October 1972 to December 1975: the rate peaked at 12.92%
• May 1977 to October 1991: the rate peaked at an all-time high of 19.10% in June 1981

There have also been less dramatic periods of over 5% that have stretched on and off from November 1994 to today. Here's a chart to make that easier to keep track of.

Should you consider a century CD?

If you think you can put money into the bank and leave it there for 100 years, there is absolutely great potential in opening a century CD from any bank willing to pay a decent return and that will give you terms like what Walden Mutual Bank is offering. You may be able to earn more interest by actively managing your money for that window, but that would certainly take up a lot more of your free time. But if you can commit to leaving between $1,000 and $150,000 in this CD for a full century, you can build a lasting financial legacy without really trying.