CD Calculator
A Certificate of Deposit locks up your money for a fixed term in exchange for a guaranteed interest rate. Enter the deposit amount, APY, term and compounding frequency, and the calculator returns the final balance at maturity, total interest earned, and what an early withdrawal would cost you in forfeited interest — useful when comparing a 5-year CD against a 1-year with rollover or a competing high-yield savings account.
How CD returns are calculated
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1
Enter deposit and term
Minimum deposits range from $0 (online banks) to $500-10,000 (jumbo CDs). Terms: 3 months to 10 years.
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2
Enter APY
APY is Annual Percentage Yield, already accounting for compounding. Use APY directly, not APR.
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3
Pick compounding frequency
Daily, monthly, quarterly, annual. Higher frequency = slightly more interest, but APY already bakes this in if the bank quoted it correctly.
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4
Read the result
Maturity balance, total interest earned, and early-withdrawal penalty estimate (typically 3-12 months of interest).
The formula
Final balance = Principal × (1 + APY)^years
For daily compounding: Final = Principal × (1 + APR/365)^(365×years) — but most banks quote APY directly so the simple exponent works.
Worked example
- Deposit: $10,000
- APY: 4.5%
- Term: 3 years
Final balance = $10,000 × (1.045)^3 = $11,411.66 Total interest = $1,411.66
CD laddering strategy
Instead of one 5-year CD at 4%, split your money across 1, 2, 3, 4 and 5-year CDs. Each year, a CD matures and renews into a new 5-year. Benefits:
- Access to 20% of the principal every year (liquidity).
- Averages out rate cycles — you’re not locked in at the worst moment.
- Provides a rolling income stream.
Early withdrawal penalty
Typical penalties:
- Under 1-year term: 3 months of interest
- 1-5 year term: 6 months of interest
- Over 5 years: 12 months of interest
Some banks deduct from principal if you withdraw before accrued interest covers the penalty. Read fine print — “no penalty” CDs exist at lower APYs.
CD vs alternatives
| Product | Access | Typical APY (2026) | FDIC insured |
|---|---|---|---|
| Savings account | Immediate | 0.5-1% (big bank), 4-5% (online high-yield) | Yes (up to $250k) |
| High-yield savings | Immediate | 4-5% | Yes |
| Money market account | Limited | 4-5% | Yes |
| CD (1-5 yr) | Locked | 4-5.5% | Yes |
| Treasury bills | Limited | 4-5% | Not FDIC but full faith and credit of US |
| I-bonds | 1-yr lockup min | Variable (inflation-linked) | Government-backed |
When CDs make sense
- Money earmarked for a known date (house down payment in 18 months, tuition).
- Retirees building a predictable income ladder.
- Those who spend from savings accounts too easily — the lockup enforces discipline.
When they don’t
- Funds needed on short notice.
- Periods when rates are rising fast — you’re locked in low.
- When tax-advantaged alternatives (IRA, 401k) have room.
Frequently Asked Questions
APY. APY is the effective annual rate including compounding; banks quote it on CDs specifically so consumers don’t have to do the compounding math themselves.
FDIC-insured banks cover CDs up to $250,000 per depositor per bank. Credit union CDs are NCUA-insured to the same limit. Brokered CDs bought through a broker are insured at the underlying bank.
Yes, interest is taxed as ordinary income at your federal and state rate. You’ll receive a 1099-INT each year for interest earned, even if it’s reinvested into the CD.
You typically have a 7-10 day grace period to withdraw or change terms. Otherwise the CD auto-rolls into a new term at whatever the current rate is — sometimes worse than what’s available elsewhere. Set a calendar reminder.