CD Calculator
What is a CD Calculator?
A certificate of deposit (CD) is a savings account that locks your money for a fixed term, such as 6 months or 5 years, in exchange for a higher interest rate than a regular savings account. A CD calculator shows exactly how much your deposit will grow by the end of the term, including the power of compound interest.
To use this CD calculator, enter your initial deposit, the annual interest rate (APY) offered by your bank, the length of the term, and how often interest is compounded. The calculator instantly shows your maturity value, the total interest earned, and the effective annual yield — the real return you get once compounding is taken into account. This helps you compare CDs from different banks and pick the one that pays the most.
Frequently Asked Questions
How is CD interest calculated?
CD interest is calculated with the compound interest formula: A = P × (1 + r/n)^(n×t), where P is your deposit, r is the annual rate, n is how often interest compounds per year, and t is the term in years. The more frequently interest compounds, the faster your money grows.
What is a good CD rate right now?
CD rates change with the broader interest rate environment. As a general rule, a CD rate that beats the national average savings rate and matches or exceeds inflation is considered good. Compare rates at banks and credit unions, including online banks, which often offer higher APYs than traditional branches.
What happens if I withdraw from a CD early?
Most CDs charge an early withdrawal penalty, usually a few months of interest. The penalty eats into or can exceed your earnings, so it is best to only put money you will not need before the term ends. A no-penalty CD is an alternative if you want flexibility.
Is CD interest taxable?
Yes, in the United States, interest earned on a CD is taxable as ordinary income in the year it is earned, even if you do not withdraw it until maturity. You will receive a 1099-INT form from your bank for interest paid.