CD Calculator
Calculate certificate of deposit returns and APY.
A certificate of deposit (CD) calculator helps you compare returns across different CD terms, rates, and compounding frequencies. CDs offer guaranteed, FDIC-insured returns in exchange for locking your money away for a set period — making them ideal for conservative savers who want predictable growth.
Examples
12-Month CD
5-Year CD
6-Month vs 1-Year vs 5-Year CD ($10,000 deposit)
| Feature | 6-Month CD | 1-Year CD | 5-Year CD |
|---|---|---|---|
| Typical APY | 4.5% - 5.0% | 4.75% - 5.25% | 4.0% - 4.5% |
| Interest Earned | ~$225 - $250 | ~$475 - $525 | ~$2,200 - $2,500 |
| Liquidity | Available in 6 months | Available in 12 months | Locked for 5 years |
| Early Withdrawal Penalty | ~3 months interest | ~6 months interest | ~12 months interest |
| Best For | Short-term parking of cash | Balanced rate and access | Maximum guaranteed return |
Frequently Asked Questions
What is the difference between APR and APY?
What happens if I withdraw early?
Are CDs FDIC insured?
What is a CD ladder?
When do CDs make sense vs savings accounts?
Are CD interest rates fixed or variable?
Key Terms
- Certificate of Deposit (CD)
- A time deposit at a bank with a fixed term and typically a fixed interest rate, offering higher rates than savings accounts in exchange for reduced liquidity.
- APY (Annual Percentage Yield)
- The effective annual return including the effect of compounding, used to compare CDs with different compounding frequencies.
- Maturity Date
- The date when the CD term ends and the principal plus interest are available for withdrawal without penalty.
- CD Ladder
- An investment strategy of opening multiple CDs with staggered maturity dates to balance higher long-term rates with periodic access to funds.
- Early Withdrawal Penalty
- A fee charged by the bank for withdrawing funds from a CD before its maturity date, typically expressed as a number of months of interest.
References
- What You Should Know About CDs — Federal Deposit Insurance Corporation (FDIC)
- Certificates of Deposit (CDs) — U.S. Securities and Exchange Commission (SEC)
Quick Tips
- •APY accounts for compounding and is the best way to compare CDs.
- •Longer terms usually offer higher rates but lock up your money longer.
- •CD laddering (staggering maturities) balances access and returns.
- •Consider FDIC insurance limits ($250,000 per depositor per institution).
A certificate of deposit (CD) calculator helps you compare returns across different CD terms, rates, and compounding frequencies. CDs offer guaranteed, FDIC-insured returns in exchange for locking your money away for a set period — making them ideal for conservative savers who want predictable growth.
How to Use This Calculator
Enter the deposit amount, annual interest rate (APR), CD term in months, and compounding frequency. Click Calculate to see the maturity value, interest earned, APY, and an estimate of early withdrawal penalties.
Understanding the Formula
Maturity Value: A = P * (1 + r/n)^(n*t). APY = (1 + r/n)^n - 1. Where P = principal, r = annual rate, n = compounding frequency per year, t = term in years.
Examples
12-Month CD
$10,000 deposited at 5% APR compounded daily for 12 months yields $10,512.67 at maturity, with an APY of 5.127%.
5-Year CD
$25,000 at 4.5% APR compounded monthly for 60 months grows to about $31,198, earning over $6,198 in interest.
Frequently Asked Questions
What is the difference between APR and APY?
APR is the stated annual rate. APY (Annual Percentage Yield) includes the effect of compounding and is always equal to or higher than APR.
What happens if I withdraw early?
Most banks charge a penalty, typically 3-6 months of interest depending on the CD term. This calculator estimates the penalty based on common bank policies.
Are CDs FDIC insured?
Yes, CDs at FDIC-insured banks are insured up to $250,000 per depositor per institution, making them very safe investments.
What is a CD ladder?
A CD ladder involves opening multiple CDs with staggered maturity dates (e.g., 1-year, 2-year, 3-year). As each CD matures, you reinvest in a longer-term CD, balancing higher rates with periodic liquidity.
When do CDs make sense vs savings accounts?
CDs are better when you know you won't need the money for a fixed period and want a guaranteed rate. Savings accounts are better for emergency funds and money you may need on short notice.
Are CD interest rates fixed or variable?
Most CDs offer a fixed rate locked in at purchase. Some banks offer variable-rate or bump-up CDs that allow a one-time rate increase if rates rise during the term.
Assumptions & Limitations
- Assumes the stated APR remains fixed for the entire CD term.
- Early withdrawal penalties are estimated using common bank policies; actual penalties vary by institution.
- Does not account for taxes on interest income, which are due annually even though the CD hasn't matured.
- Assumes interest is reinvested within the CD; some CDs allow interest to be paid out periodically.
6-Month vs 1-Year vs 5-Year CD ($10,000 deposit)
| Feature | 6-Month CD | 1-Year CD | 5-Year CD |
|---|---|---|---|
| Typical APY | 4.5% - 5.0% | 4.75% - 5.25% | 4.0% - 4.5% |
| Interest Earned | ~$225 - $250 | ~$475 - $525 | ~$2,200 - $2,500 |
| Liquidity | Available in 6 months | Available in 12 months | Locked for 5 years |
| Early Withdrawal Penalty | ~3 months interest | ~6 months interest | ~12 months interest |
| Best For | Short-term parking of cash | Balanced rate and access | Maximum guaranteed return |
Key Terms
- Certificate of Deposit (CD)
- A time deposit at a bank with a fixed term and typically a fixed interest rate, offering higher rates than savings accounts in exchange for reduced liquidity.
- APY (Annual Percentage Yield)
- The effective annual return including the effect of compounding, used to compare CDs with different compounding frequencies.
- Maturity Date
- The date when the CD term ends and the principal plus interest are available for withdrawal without penalty.
- CD Ladder
- An investment strategy of opening multiple CDs with staggered maturity dates to balance higher long-term rates with periodic access to funds.
- Early Withdrawal Penalty
- A fee charged by the bank for withdrawing funds from a CD before its maturity date, typically expressed as a number of months of interest.
References
- What You Should Know About CDs — Federal Deposit Insurance Corporation (FDIC)
- Certificates of Deposit (CDs) — U.S. Securities and Exchange Commission (SEC)