CD Calculator
Calculate the maturity value and interest earned on a Certificate of Deposit (CD). Enter your deposit amount, APY, term, and compounding frequency to see your guaranteed returns. Compare with our savings calculator or check the effective interest rate for different compounding periods.
How to Calculate CD Interest
- Determine your initial deposit amount and the CD's APY (Annual Percentage Yield).
- Note the term length and how often interest compounds.
- Apply the compound interest formula using the deposit, rate, compounding frequency, and term.
- Subtract the initial deposit from the maturity value to find interest earned.
- Compare APY across different CDs to find the best return for your term.
Formula
Maturity Value = P x (1 + r/n)^(n x t)
Where:
P = Principal (initial deposit)
r = Annual interest rate (as decimal)
n = Compounding frequency per year
t = Term in years
Interest Earned = Maturity Value - Principal
APY = (1 + r/n)^n - 1Example
You deposit $10,000 in a 12-month CD at 5.0% APY compounded monthly:
P = $10,000
r = 5.0% = 0.05
n = 12 (monthly compounding)
t = 1 year
Maturity Value = $10,000 x (1 + 0.05/12)^(12 x 1)
= $10,000 x (1.004167)^12
= $10,000 x 1.05116
= $10,511.62
Interest Earned = $10,511.62 - $10,000 = $511.62
Effective Rate = (1 + 0.05/12)^12 - 1 = 5.116%CD Rates Comparison Table
| Deposit | 6 mo @ 4.5% | 1 yr @ 5.0% | 2 yr @ 4.5% | 5 yr @ 4.0% |
|---|---|---|---|---|
| $5,000 | $114 | $256 | $470 | $1105 |
| $10,000 | $227 | $512 | $940 | $2210 |
| $25,000 | $568 | $1279 | $2350 | $5525 |
| $50,000 | $1136 | $2558 | $4700 | $11050 |
| $100,000 | $2271 | $5116 | $9399 | $22100 |
Frequently Asked Questions
What is a Certificate of Deposit (CD)?
A CD is a time deposit offered by banks that pays a fixed interest rate for a specified term. You agree to leave your money deposited for the full term in exchange for a higher rate than a regular savings account. CDs are FDIC insured up to $250,000.
What is the difference between APR and APY for CDs?
APR is the simple annual rate without compounding. APY (Annual Percentage Yield) includes the effect of compounding and represents your true annual return. Banks advertise APY for CDs because it is the actual yield you earn.
What happens if I withdraw early from a CD?
Early withdrawal typically incurs a penalty, usually 3-6 months of interest depending on the CD term. Some banks offer no-penalty CDs with slightly lower rates. Always check the early withdrawal terms before opening a CD.
What is a CD ladder?
A CD ladder splits your deposit across multiple CDs with staggered maturity dates (e.g., 1-year, 2-year, 3-year). As each CD matures, you reinvest at the longest term. This provides regular access to funds while capturing higher long-term rates.
Are CD earnings taxable?
Yes, CD interest is taxed as ordinary income in the year it is earned, even if you do not withdraw it. The bank will issue a 1099-INT form. Consider tax-advantaged accounts (IRA CDs) to defer or avoid taxes on CD interest.