How to use the CD calculator
Enter the amount you plan to deposit, the rate the bank or credit union offers, the term and how often interest compounds. Most US banks advertise certificates of deposit by APY, so that is the default. The deposit agreement or the bank's rate page also lists the compounding frequency; daily and monthly are the most common.
The result shows what the CD is worth on its maturity date, the interest earned, and both rates side by side. The table below it shows how the balance grows each year, and you can open the month-by-month schedule to see the interest credited every month.
The calculator assumes you leave the interest in the CD so that it compounds, and that the rate stays fixed for the whole term, as it does for a standard CD. If your bank pays interest out to a savings account instead, your total interest will be a little lower than shown, because that interest no longer compounds.
APY vs APR: why compounding matters
The APR (or simply the interest rate) is the yearly rate before compounding. The APY is what you actually earn in a year once interest is added to your balance and starts earning interest itself. Under the federal Truth in Savings rules, banks must quote the APY, which makes CDs easy to compare: two CDs with the same APY earn the same amount in a year, whatever their compounding.
Compounding matters when you only know the interest rate. A 4.50% rate on $10,000 for a year is worth $10,450.00 when compounded annually, $10,457.65 when compounded quarterly and $10,460.25 when compounded daily. That daily-compounded CD has an APY of 4.602%. Choose “APR” in the calculator to see this for any rate.
CD interest formula with a worked example
With a deposit P, an interest rate r compounded n times a year, and a term of t years, the maturity value is:
Maturity value = P × (1 + r ÷ n)n × t
If you start from the APY instead, the formula is simpler: P × (1 + APY)t. For example, $10,000 in a 12-month CD at 4.50% APY grows to $10,450.00, so you earn $450.00. In a 5-year CD at 4.00% APY, the same $10,000 grows to $12,166.53, earning $2,166.53. The extra interest in later years comes from compounding: you earn interest on interest you have already earned.
When the term does not line up with the compounding periods, for example a 7-month CD that compounds quarterly, the calculator adds simple interest for the part period at maturity.
Early withdrawal penalties
A CD pays a fixed rate because you agree to leave the money in for the full term. If you take it out early, the bank charges a penalty, usually a number of months of interest. Common penalties are around 3 months of interest for terms under a year and 6 to 12 months or more for longer terms, but every bank sets its own, so check the account agreement. Federal rules only set a minimum: at least 7 days of simple interest for money withdrawn within six days of the deposit.
This calculator estimates the penalty as simple interest on your deposit at the CD's stated rate. Take the $10,000 5-year CD at 4.00% APY: cash it in after 18 months with a 6-month interest penalty and the balance of $10,605.96 is reduced by $196.11, leaving you $409.85 of interest. Withdraw after only 3 months and the penalty of $196.11 is more than the $98.53 you have earned, so you get back less than you put in. Some banks calculate the penalty on the amount withdrawn or use a different method, so treat this as an estimate.
Taxes and deposit insurance
CD interest is taxed as ordinary income in the year it is credited to your account, even if you leave it in the CD until maturity. Your bank sends Form 1099-INT if you earn $10 or more in a year. If you pay an early withdrawal penalty, you can generally deduct it as an adjustment to income on your federal return. The amounts in this calculator are before tax; to see how your tax bracket affects your take-home pay, try our paycheck calculator.
CDs at FDIC-insured banks are covered up to $250,000 per depositor, per insured bank, for each account ownership category. Credit union share certificates have the same $250,000 coverage through the NCUA. If you plan to deposit more than that at one institution, check the ownership categories or spread the money across institutions.
Tips for choosing a CD
Compare APYs, not rates. The APY already includes compounding, so it is the fair way to compare offers.
Match the term to when you need the money. A higher rate on a long CD is not worth it if an early withdrawal penalty wipes out the interest.
Consider a CD ladder. Splitting your money across several terms, for example 1 to 5 years, gives you a CD maturing regularly while the rest keeps a longer-term rate.
Watch the maturity date. Many CDs renew automatically into a new CD at the bank's current rate. You usually have a short grace period after maturity to withdraw or move the money without a penalty.
Saving in India? Our FD calculator works the same way for Indian bank fixed deposits, with quarterly compounding and TDS.