CD Interest Calculator
A certificate of deposit (CD) locks in a fixed interest rate for a set term in exchange for keeping your money deposited. This calculator estimates your CD's final balance, total interest earned, and effective annual yield (APY).
How it works
This calculator uses the standard compound interest formula: A = P × (1 + r/n)^(n×t), where P is your initial deposit, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the term in years.
Because interest is added to the balance at each compounding period, you earn interest on previously earned interest. The more frequently a CD compounds, the higher the effective annual yield (APY), even at the same stated rate.
Tips
Compare CDs by APY rather than the nominal rate, since APY accounts for compounding frequency and reflects what you'll truly earn.
Watch for early withdrawal penalties — pulling money out before the term ends can wipe out months of interest. Match the CD term to when you'll actually need the funds.
FAQ
What is the difference between interest rate and APY?
The interest rate is the stated nominal rate, while APY (annual percentage yield) reflects the rate after compounding is applied. APY is always equal to or higher than the nominal rate and is the better number for comparing CDs.
Is CD interest taxable?
Yes. Interest earned on a CD is generally taxable as ordinary income in the year it is credited, even if you don't withdraw it. Your bank typically issues a Form 1099-INT for interest of $10 or more.
What happens if I withdraw early?
Most CDs charge an early withdrawal penalty, often equal to several months of interest. This can reduce or eliminate your earnings, so only deposit money you won't need before maturity.