Introduction
A CD, or certificate of deposit, is a savings account that holds your deposit for a fixed term and pays you interest until it matures.8 You put money in, leave it alone, and the bank pays you interest. This CD interest rate calculator shows how much your money will grow by the end of the term.
Type in your deposit, your interest rate, how often the interest compounds, and how long you will keep the CD. The calculator then shows:
- Your ending balance at maturity
- Total interest earned
- The effective APY (your true yearly yield)
- Interest after taxes, if you add your tax rate
- What an early withdrawal penalty would cost you
You also get a step-by-step solution, charts, and a month-by-month or year-by-year schedule. Want to check two CDs at once? Turn on the compare switch to see which one pays more.
How to use our CD Interest Rate Calculator
Enter your CD deposit, rate, compounding frequency, and term. The calculator shows your ending balance, total interest earned, effective APY, a step-by-step solution, charts, and a full accumulation schedule.
Initial Deposit ($): Type the amount of money you put into the CD. It must be more than $0.
Interest Rate (%): Type the rate your bank pays. If you pick annual compounding, this is your APY. For any other choice, it is treated as a nominal (APR) rate.
Compounding Frequency: Pick how often the bank adds interest: annually, semiannually, quarterly, monthly, or continuously. More frequent compounding gives a higher APY.
Deposit Length (Years and Months): Enter how long your money stays in the CD. Use whole years plus 0 to 11 extra months. For example, 1 year and 6 months equals 1.5 years.
Marginal Tax Rate (%): Optional. Enter your tax rate to see your after-tax interest and after-tax ending balance. Leave it at 0 to skip taxes.
Early Withdrawal Penalty (months of interest): Optional. Enter how many months of interest your bank charges if you cash out early. Common amounts are 3, 6, or 12 months. Leave it at 0 to skip the penalty.
Early Withdrawal After (months): Used only when you enter a penalty. Enter how many months after opening you take the money out. It must be before the CD matures. The calculator shows the interest earned up to that month, the penalty, and what is left of your interest and balance.
Compare a Second Scenario: Optional. Turn this switch on to enter a second CD with its own deposit, rate, compounding, and term. You will get a side-by-side table that shows which CD earns more.
Calculate and Reset: Click Calculate to update all results, charts, and tables. Click Reset to return every field to its starting value.
Pie chart view: If you entered a tax rate, switch between Pre-Tax and After-Tax to see how taxes change your interest share.
Schedule view: Choose Yearly View or Monthly View to see interest earned each period, cumulative interest, and your balance over time.
What Is a CD (Certificate of Deposit)?
A CD is a savings account with a set end date. You give a bank a lump sum of money, and the bank pays you interest until the term ends. That end date is called the maturity date. A CD can pay a fixed rate, or a variable rate that can rise and fall with market rates or change on a set schedule.8 When the CD matures, you can take your money back plus the interest it earned, or roll it over into a new CD.8
CDs usually pay more than a regular savings account because you agree to leave the money alone. Terms commonly run from 1 month to 60 months, with 3-month, 6-month, 12-month, 24-month, 36-month and 60-month CDs among the standard products.5
How CD Interest Works
When CD interest stays in the account, it is compound interest. That means the interest you earn also starts earning interest. Some CDs do not compound and pay the interest out to you by check or transfer instead.1 For interest that compounds, the calculator uses the standard compound interest formula.6
Ending Balance = P × (1 + r/n)n×t
- P = your deposit (the principal)
- r = the yearly interest rate as a decimal (5% = 0.05)
- n = how many times per year interest is added
- t = the term in years
If interest is added nonstop, called continuous compounding, the formula becomes P × er×t.6
APR vs. APY
These two numbers look alike but are not the same:
- APR is the plain yearly rate. It does not count compounding. Account disclosures call it the interest rate and may also call it the annual percentage rate.7
- APY is the true yearly return after compounding is counted.1 When interest compounds at least once a year, APY is equal to or higher than APR.
APY is the fair way to compare two CDs. A 5% rate that compounds monthly earns more than a 5% rate that compounds once a year, even though both say "5%."
How Often Interest Compounds
| Compounding | Times per year (n) | APY on a 5% rate |
|---|---|---|
| Annually | 1 | 5.0000% |
| Semiannually | 2 | 5.0625% |
| Quarterly | 4 | 5.0945% |
| Monthly | 12 | 5.1162% |
| Continuously | ∞ | 5.1271% |
More frequent compounding means more money, but the gain gets smaller each step up.
Taxes on CD Interest
CD interest counts as regular income, taxable in the year it becomes available to you, even if the CD has not matured yet.2 If your bank pays you $10 or more in interest, it sends you a Form 1099-INT.2 You must report all your interest on your tax return, even if you get no form.2 Your after-tax interest is simply the interest times (1 − your tax rate). A CD held inside an IRA can grow without a yearly tax bill.
Early Withdrawal Penalties
If you take your money out before the maturity date, you will usually pay a penalty, typically by giving up some of the interest you earned.8 Federal law sets a minimum penalty on early withdrawals from CDs, but there is no maximum penalty.9 The penalty is usually stated as a number of months of interest. Common rules:
- Terms under 1 year: about 3 months of interest
- Terms of 1 to 3 years: about 6 months of interest
- Longer terms: 12 months or more of interest
The penalty can eat all the interest you earned. If you withdraw soon after opening, it can be more than the interest earned so far and take part of your deposit. Check the penalty and the term before you lock the money in.
Things to Know Before You Open a CD
- On a fixed-rate CD, your rate is locked for the whole term, even if market rates change later.8
- You generally cannot add money to a CD during its term.8
- CDs at a bank are FDIC insured to at least $250,000 per depositor at each insured bank,3 and share accounts at federally insured credit unions are insured up to $250,000 per member by the NCUA.4 Some state-chartered credit unions use private insurers instead, which the federal government does not back.4
- Some CDs renew on their own at maturity. A grace period is the time after an automatically renewing CD matures when you can take your money out without a penalty.7 Watch it if you want your cash back.
- Splitting money across several CDs with different end dates is called a CD ladder.8 Because the CDs mature at different times, part of your money comes free more often.