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CD Calculator
A CD calculator shows what a certificate of deposit will be worth when it matures. Enter your deposit, the APY the bank offers, and the term in years, and it works out the maturity value and the total interest you will earn — so you can compare a 1-year CD against a 5-year CD before you lock your money away.
CDs in this calculator compound once a year.
| Your deposit | |
| Interest earned | |
| Effective annual yield |
How it works
A certificate of deposit, or CD, is one of the simplest savings products in the United States. You hand a bank a lump sum, the bank pays you a fixed rate, and you agree not to touch the money until the term ends. In return for locking your money away, CDs usually pay more than a regular savings account. Deposits at FDIC-insured banks are protected up to $250,000 per depositor, per bank, so a CD is about as safe as savings get.
Your deposit is the lump sum you put in — many banks require at least $500 or $1,000 to open a CD. The APY is the annual percentage yield, the rate that already includes compounding; it is the fairest number for comparing CDs from different banks. The term is how long the money stays locked up, from a few months to ten years. Compounding is how often the bank adds interest to your balance so that it starts earning interest itself; annual compounding adds it once a year, monthly compounding twelve times a year.
The formula for compound growth is:
where r is the annual rate, m is the number of compounding periods per year, and t is the term in years. With annual compounding (m = 1), this simplifies to Deposit × (1 + r)t.
Interest earned is simply the maturity value minus your deposit. Because the rate is fixed at the time you open the CD, the result is exact as long as you hold the CD to maturity — the only surprises are taxes on the interest and any penalty if you withdraw early. Longer terms usually pay higher rates, but they also tie your money up longer, so a CD ladder — splitting your money across 1-, 2-, 3-, 4-, and 5-year CDs — is a popular way to get a decent rate while freeing up some cash every year.
Worked example
James in Denver, Colorado, has $10,000 set aside for a house down payment he will not need for five years. His bank offers a 5-year CD at 4.5% APY with annual compounding. He wants to know what he will have at maturity.
Using the formula with annual compounding: $10,000 × (1 + 0.045)5. First, 1.0455 is about 1.246182, so the maturity value is $10,000 × 1.246182 = $12,461.82. The interest earned is $12,461.82 − $10,000 = $2,461.82.
For comparison, $10,000 sitting in a savings account at 0.5% would earn only about $253 over five years — which is why savers with money they can lock away often choose CDs.
FAQ
What is a CD (certificate of deposit)?
A certificate of deposit is a savings account where you agree to leave money with a bank for a fixed term, such as 6 months or 5 years, in exchange for a fixed interest rate. Your money is locked up until the term ends, but the rate cannot drop, and deposits are FDIC insured up to $250,000 per depositor, per bank.
What is the difference between APY and interest rate on a CD?
The interest rate is the simple yearly rate, while APY (annual percentage yield) includes compounding, so it shows what you actually earn in a year. APY is the number to compare when you shop for CDs, because it already accounts for how often interest is added.
What happens if I withdraw a CD early?
Most banks charge an early withdrawal penalty, often several months of interest, and some CDs do not allow early withdrawal at all. That is why you should only put money in a CD that you will not need before the term ends.
Are CD earnings taxed?
Yes. CD interest is taxed as ordinary income in the year it is earned, even if you leave it in the account. Your bank sends a Form 1099-INT each year showing the interest. This calculator shows earnings before tax.