How to use this CD calculator
- Deposit amount — what you put into the CD when you open it.
- Rate and rate type — banks almost always advertise the APY. If you have the nominal interest rate instead, switch the rate type to APR.
- Term — how many months until the CD matures.
- Compounding — how often interest is credited. It changes the APY when you enter an APR; when you enter an APY, it only affects the equivalent APR shown.
The result shows your balance at maturity, the interest earned and both versions of the rate, assuming you leave the interest in the CD until it matures.
The CD interest formula
Ending balance = P × (1 + r/n)n × t = P × (1 + APY)t
where P is the deposit, r the annual interest rate, n the compounding periods per year and t the term in years. Because APY already includes compounding, the second form is the simplest: raise one plus the APY to the number of years.
APY vs. APR (interest rate)
The interest rate (sometimes called APR on deposit accounts) is the nominal yearly rate before compounding. The APY is what your money actually earns in a year once interest earns interest:
APY = (1 + r/n)n − 1
Here is how a 5% interest rate turns into an APY under different compounding schedules:
| Compounding | Periods per year (n) | APY |
|---|---|---|
| Annually | 1 | 5.000% |
| Quarterly | 4 | 5.095% |
| Monthly | 12 | 5.116% |
| Daily | 365 | 5.127% |
Because the Truth in Savings Act requires banks to disclose APY, it is the fairest way to compare CDs and savings accounts side by side, whatever their compounding schedule.
Worked example
You put $10,000 into a 12-month CD paying 4.5% APY. At maturity it is worth 10,000 × 1.045 = $10,450.00, so you earn $450. An 18-month CD at the same APY grows to 10,000 × 1.0451.5 = $10,682.54.
Interest on $10,000 at 4.5% APY for common terms:
| Term | Interest earned | Balance at maturity |
|---|---|---|
| 3 months | $110.65 | $10,110.65 |
| 6 months | $222.52 | $10,222.52 |
| 12 months | $450.00 | $10,450.00 |
| 18 months | $682.54 | $10,682.54 |
| 24 months | $920.25 | $10,920.25 |
| 36 months | $1,411.66 | $11,411.66 |
| 60 months | $2,461.82 | $12,461.82 |
Things to check before you open a CD
- Early withdrawal penalty. Cashing out before maturity usually costs a set number of months of interest, and on short CDs that can eat into your principal. Only lock up money you will not need.
- Deposit insurance. CDs at FDIC-insured banks and NCUA-insured credit unions are protected up to $250,000 per depositor, per institution, per ownership category.
- Taxes. CD interest is taxed as ordinary income, generally in the year it is credited to your account — even if you leave it in the CD. Your bank reports it on Form 1099-INT.
- Automatic renewal. Many CDs roll into a new CD at maturity at whatever rate is then offered. Note the grace period so you can withdraw or move the money if you want.
- Ladders. Splitting your money across CDs that mature at different times — for example 1, 2 and 3 years — gives you regular access to part of your cash while still capturing longer-term rates.
Results are estimates based on the rate you enter; the bank's account disclosure is the final word.
Frequently asked questions
What is the difference between APY and the interest rate?
The interest rate is the yearly rate before compounding. APY includes the effect of compounding, so it is the same or slightly higher. A 5% rate compounded daily is about a 5.13% APY.
Is CD interest compounded?
Usually, yes — daily or monthly at most banks, as long as the interest stays in the CD. Some CDs pay interest out to another account instead, in which case it does not compound and you earn simple interest.
What happens if I withdraw money early?
You typically pay an early withdrawal penalty, often stated as a number of months of interest. Check the terms before opening, or look for a no-penalty CD if you might need the money sooner.
Are CDs safe?
CDs at insured banks and credit unions are covered by FDIC or NCUA insurance up to $250,000 per depositor, per institution, per ownership category. Your rate is also fixed for the full term.
What is a CD ladder?
A CD ladder spreads your savings across several CDs with staggered maturity dates. As each one matures you can use the cash or reinvest it at the longest term, so part of your money is always close to being available.
Last updated: October 8, 2026