CD Calculator

What Is the CD Calculator?

A certificate of deposit (CD) locks in a fixed deposit amount at a fixed rate for a fixed term, using the same compound-growth math as a general investment, but as a specific, guaranteed-rate product with an early-withdrawal-penalty tradeoff for accessing funds before maturity.

How to Use This Calculator

Enter your deposit amount, the CD's APY, and its term in months.

The Formula

Worked Example

Important Notes

Another Worked Example

Using the formula shown on this page, a hypothetical $10,000 deposit at 4% APY for a 12-month term becomes 10,000 x 1.04 to the power of 1, or exactly $10,400, for interest of $400. Extend the same deposit to 24 months and the value is 10,000 x 1.04 squared, or $10,816. The second year earns more than the first because the interest from year one is now part of the balance.

A Note on APY and the Formula

An APY is already the effective annual yield, so the calculator raises one plus the APY to the power of the term in years: one year at 4% APY earns exactly 4%, and a 24-month CD compounds that yearly result twice. Because the APY already reflects how often the bank credits interest, no extra compounding step is applied. Treat the result as a close estimate and check it against the bank's disclosure. Banks also differ in how often interest is credited and whether it is paid out or added to the CD.

Using the Calculator to Compare CDs

• Enter the same deposit for each CD you are considering, changing only the APY and term.
• Compare the dollar interest, not just the rates, because a longer term at a slightly higher rate can lock your money for much longer.
• Consider a ladder. Splitting money across terms, such as 6, 12 and 24 months, gives you access to part of the funds at regular intervals while earning higher rates on longer terms. You can calculate each rung separately and add the interest.

Things the Result Does Not Show

• Early-withdrawal penalties, which are set by the bank and can reduce your principal in some cases if the penalty exceeds the interest earned.
• Taxes. Interest is usually taxable income in the year it is credited or paid, depending on your country and account type; check with your tax authority or a tax professional.
• Inflation. If prices rise faster than your CD rate, your purchasing power falls even though the balance grows.
• Renewal terms. Many CDs automatically renew at the then-current rate, which could be lower or higher than the original.

Also confirm that the institution is insured, for example by the FDIC for banks or the NCUA for credit unions in the United States, and check current coverage limits on the official websites rather than assuming.

A Quick Sanity Check

Divide the interest earned by the deposit and compare it to the APY multiplied by the term in years. The two should be close, with the calculated figure slightly higher for multi-year terms because of compounding. A large difference usually means the term was typed in years instead of months, which is the most common input error with this tool.

Frequently Asked Questions