CD Calculator
A CD calculator finds what a certificate of deposit is worth when it matures: multiply the deposit by (1 + APY) raised to the term in years. For example, $10,000 in a 2-year CD at 4.00% APY grows to $10,000 × 1.042 = $10,816.00, so it earns $816.00 in interest.
Show steps
- Write the term in years: 2 years gives t = 2 (24 months).
- Convert the APY to the interest rate compounded daily: r = m × ((1 + APY)^(1 ÷ m) − 1) = 365 × ((1 + 0.04)^(1 ÷ 365) − 1) ≈ 3.9223%. The APY is higher than the interest rate because it includes the interest earned on interest.
- Grow the deposit with the compound interest formula. The APY is the growth for one full year, so A = P × (1 + APY)^t = $10,000.00 × 1.04^2 = $10,000.00 × 1.0816 ≈ $10,816.00.
- Interest earned = A − P = $10,816.00 − $10,000.00 = $816.00. That is a 8.16% return over 2 years.
- Check with the Regulation DD idea of APY: (1 + interest ÷ deposit)^(1 ÷ t) − 1 = (1 + 0.0816)^(1 ÷ 2) − 1 = 4%, the same APY as above.
- Common mistake: simple interest, P × APY × t = $10,000.00 × 0.04 × 2 = $800.00, understates the interest by $16.00 because it leaves out the interest earned on earlier interest.
Interest schedule (24 months)
| Month | Date | Interest | Total interest | Value |
|---|---|---|---|---|
| Start | Nov 2026 | − | − | $10,000.00 |
| 1 | Dec 2026 | $32.74 | $32.74 | $10,032.74 |
| 2 | Jan 2027 | $32.84 | $65.58 | $10,065.58 |
| 3 | Feb 2027 | $32.95 | $98.53 | $10,098.53 |
| 4 | Mar 2027 | $33.06 | $131.59 | $10,131.59 |
| 5 | Apr 2027 | $33.17 | $164.76 | $10,164.76 |
| 6 | May 2027 | $33.28 | $198.04 | $10,198.04 |
| 7 | Jun 2027 | $33.39 | $231.42 | $10,231.42 |
| 8 | Jul 2027 | $33.50 | $264.92 | $10,264.92 |
| 9 | Aug 2027 | $33.60 | $298.52 | $10,298.52 |
| 10 | Sep 2027 | $33.71 | $332.24 | $10,332.24 |
| 11 | Oct 2027 | $33.83 | $366.06 | $10,366.06 |
| 12 | Nov 2027 | $33.94 | $400.00 | $10,400.00 |
| 13 | Dec 2027 | $34.05 | $434.05 | $10,434.05 |
| 14 | Jan 2028 | $34.16 | $468.21 | $10,468.21 |
| 15 | Feb 2028 | $34.27 | $502.48 | $10,502.48 |
| 16 | Mar 2028 | $34.38 | $536.86 | $10,536.86 |
| 17 | Apr 2028 | $34.49 | $571.35 | $10,571.35 |
| 18 | May 2028 | $34.61 | $605.96 | $10,605.96 |
| 19 | Jun 2028 | $34.72 | $640.68 | $10,640.68 |
| 20 | Jul 2028 | $34.83 | $675.52 | $10,675.52 |
| 21 | Aug 2028 | $34.95 | $710.47 | $10,710.47 |
| 22 | Sep 2028 | $35.06 | $745.53 | $10,745.53 |
| 23 | Oct 2028 | $35.18 | $780.71 | $10,780.71 |
| 24 | Nov 2028 | $35.29 | $816.00 | $10,816.00 |
| Total | $816.00 | $10,816.00 |
How to use the CD calculator
- Pick a mode: CD earnings, CD ladder, early withdrawal, or CD vs savings.
- Enter the deposit and the term in months or years.
- Type the rate the bank quotes and say what it is: the APY, or the interest rate. Choose the compounding (daily, monthly, quarterly, semiannually or annually) from the account disclosure. The calculator converts one into the other.
- Optional: add your tax rate on interest to see after-tax interest and after-tax yield.
- Read the answer, then open Show steps, the chart and the schedule table.
Results are estimates for learning and planning, not financial advice. Your bank’s disclosure is the final word on your CD.
CD interest formula
A CD earns compound interest: interest is added to the balance, and later interest is paid on that bigger balance. With an interest rate and a compounding frequency, the value at maturity is
A = P × (1 + r ÷ m)m × t
- A is the value at maturity (deposit plus interest).
- P is the deposit, also called the principal.
- r is the yearly interest rate as a decimal (4% = 0.04).
- m is how many times a year interest is compounded: 365 for daily, 12 for monthly, 4 for quarterly, 1 for annually.
- t is the term in years (18 months = 1.5 years).
If you know the APY instead, the formula is simpler, because the APY already includes compounding: A = P × (1 + APY)t. Interest earned is A − P. Our compound interest calculator covers the same formula with regular deposits added.
APY vs interest rate on a CD
Under the Truth in Savings rules (Regulation DD), banks show two numbers. The regulation defines the interest rate as “the annual rate of interest paid on an account which does not reflect compounding,” and the annual percentage yield as a rate “reflecting the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a 365-day period.” So the APY is the effective yield for one year, and it is the fair number for comparing CDs from different banks.
To convert between them, with m compounding periods a year:
- APY = (1 + r ÷ m)m − 1
- r = m × ((1 + APY)1/m − 1)
| Quoted as | Compounding | Converts to |
|---|---|---|
| 4.00% interest rate | Daily | 4.081% APY |
| 4.00% interest rate | Monthly | 4.074% APY |
| 4.00% APY | Daily | 3.922% interest rate |
| 4.00% APY | Monthly | 3.928% interest rate |
A common slip is to type an interest rate into a box that expects an APY, or to divide an APY by 12 to get a monthly rate. Both overstate the interest a little.
CD calculator examples
Example 1: $25,000 for 18 months, with tax
A bank pays a 4.5% interest rate compounded monthly. A = 25,000 × (1 + 0.045 ÷ 12)18 = $26,742.38, so the interest is $1,742.38. The APY is (1.00375)12 − 1 ≈ 4.594%. In a 22% tax bracket, about $383.32 goes to tax and $1,359.06 is left, an after-tax yield of about 3.592% a year.
Example 2: a five-rung CD ladder
Split $10,000 into five $2,000 CDs of 1, 2, 3, 4 and 5 years at 4.00%, 4.10%, 4.20%, 4.30% and 4.40% APY. The 1-year CD grows to $2,080.00 and the 5-year CD to $2,480.46. Together the five CDs are worth $11,357.39, so the ladder earns $1,357.39, and its blended APY is the average of the five rates, 4.20%. Putting all $10,000 in the 5-year CD would give $12,402.31, but none of it would be free for five years.
Example 3: cashing out early
A $10,000 2-year CD at 4.00% APY, compounded daily, is closed after 12 months. It has earned $400.00. The penalty is 6 months of interest at the 3.9223% interest rate: 10,000 × 0.039223 × 6 ÷ 12 ≈ $196.11. You receive $10,203.89, compared with $10,816.00 at maturity. To come out ahead by switching, the new account would need about 6.00% APY for the remaining year.
What a $10,000 CD earns
Value at maturity of a $10,000 deposit at sample APYs (not current market rates):
| APY | 6 months | 1 year | 2 years | 3 years | 5 years |
|---|---|---|---|---|---|
| 3.00% | $10,148.89 | $10,300.00 | $10,609.00 | $10,927.27 | $11,592.74 |
| 4.00% | $10,198.04 | $10,400.00 | $10,816.00 | $11,248.64 | $12,166.53 |
| 5.00% | $10,246.95 | $10,500.00 | $11,025.00 | $11,576.25 | $12,762.82 |
How a CD ladder works
A ladder splits one deposit into several CDs with staggered terms. When the shortest CD matures, you can use the money or renew it into a new long-term CD. Repeat that each time and one CD comes due every year, while most of your money earns long-term rates. You give up some yield compared with locking everything into the longest CD, and in return you get regular access and the chance to renew at future rates. In the calculator, enter a rate for each rung, because banks pay different rates for different terms.
CD early withdrawal penalties
Regulation DD requires banks to disclose, for a time account, “a statement that a penalty will or may be imposed for early withdrawal, how it is calculated” and the conditions for it. The penalty itself is set by the bank. Federal rules set a minimum of seven days’ simple interest for money withdrawn within the first six days after deposit, and the OCC’s help site notes that there is no maximum penalty. Common formulas are a number of months or days of interest, such as 90 days or 6 months, but some banks use the APY, charge only on the amount withdrawn, or let the penalty cut into principal. That is why the calculator asks you to enter the penalty and explains its assumption in the steps.
CD vs savings account
A CD locks a rate for a fixed term; a savings account lets you withdraw at any time, but its rate can change whenever the bank decides. The comparison mode grows the same deposit at both APYs. At 4.00% for the CD and 3.00% for savings, $10,000 earns $816.00 versus $609.00 over 2 years, a $207.00 difference, as long as the savings rate never moves. If you are saving toward a target instead of a lump sum, the savings goal calculator works out the monthly deposit.
Are CDs safe? FDIC insurance basics
The FDIC lists time deposits such as certificates of deposit among insured deposits. Coverage is $250,000 per depositor, per FDIC-insured bank, for each account ownership category, and it does not cover non-deposit investment products sold at banks. Credit union CDs are covered by the NCUA up to the same amount, according to the CFPB. The calculator shows a note when a deposit is above $250,000.
Taxes on CD interest
The IRS lists interest on certificates of deposit as taxable interest. You should receive Form 1099-INT if you earned $10 or more, and you must report the interest even if no form arrives. The calculator applies one flat rate to the interest; your real tax depends on your bracket, state and the year the interest is credited.
Common CD calculation mistakes
- Using simple interest: $10,000 × 4% × 2 = $800, but the 2-year CD actually earns $816.00.
- Mixing up APY and interest rate, or ignoring the compounding frequency.
- Comparing a CD with a savings account as if the savings rate were guaranteed.
- Forgetting the early withdrawal penalty when there is a chance you will need the money.
Sources
All sources were checked November 2026.
- CFPB, Regulation DD § 1030.2 Definitions (APY, interest rate, time account)
- CFPB, Regulation DD Appendix A, Annual Percentage Yield Calculation
- CFPB, Regulation DD § 1030.4 Account disclosures (time account features)
- CFPB, What is a certificate of deposit (CD)?
- FDIC, Understanding Deposit Insurance
- OCC BankAnswers, Penalties for withdrawing money early from a CD
- IRS, Topic no. 403, Interest received
CD interest practice quiz: 10 questions
Test yourself with 10 multiple-choice questions. Choose an answer and press Submit to see if you are right and why. Your score appears at the end.
With a 1-year term the interest is the deposit times the APY: 5,000 × 0.05 = $250.00. $5,250 is the value at maturity, not the interest.
A = 8,000 × 1.03² = 8,000 × 1.0609 = $8,487.20. $8,480 uses simple interest and misses the interest on interest.
APY = (1 + 0.06 ÷ 12)^12 − 1 = 1.005^12 − 1 ≈ 6.17%. Compounding makes the APY higher than the interest rate.
With annual compounding, (1 + r ÷ 1)^1 − 1 = r, so the APY equals the interest rate. More frequent compounding makes the APY higher.
The APY is growth per year, so raise (1 + APY) to the term in years: 18 months = 1.5 years, so A = 10,000 × 1.04^1.5 ≈ $10,605.96.
Penalty = 20,000 × 0.048 × 3 ÷ 12 = $240.00. $960 is a full year of interest; $80 is one month.
With equal amounts, the blended APY is the average: (4.0 + 4.3 + 4.6) ÷ 3 = 4.3%. Adding the rates (12.9%) is a common slip.
Tax = 600 × 0.22 = $132, so you keep 600 − 132 = $468.00. CD interest is taxable income according to the IRS.
CD interest 15,000 × 0.045 = $675; savings interest 15,000 × 0.035 = $525. The difference is $150.00.
The FDIC insures $250,000 per depositor, per insured bank, for each ownership category, so 300,000 − 250,000 = $50,000 is over the limit.
Quiz complete
Frequently asked questions
How much will a $10,000 CD earn in a year?
At an APY of a, a 1-year CD earns $10,000 × a. At 4.00% APY that is $400.00; at 5.00% APY it is $500.00. Use the APY your bank quotes today.
How is CD interest calculated?
Banks compound interest at a set frequency, often daily or monthly. The value at maturity is P × (1 + r ÷ m)m × t, or P × (1 + APY)t when you start from the APY.
Is APY the same as the interest rate on a CD?
No. The interest rate does not include compounding; the APY does. They are equal only with annual compounding. A 4.00% rate compounded daily is a 4.081% APY.
What happens if I withdraw money from a CD early?
You usually pay a penalty, often a set number of days or months of interest. If you have not earned that much interest yet, some banks take the rest from your principal. Check your account disclosure.
Is a CD ladder better than one CD?
A ladder gives you access to part of your money at regular intervals and lets you renew at future rates. A single long CD may pay more when long terms have higher rates, but it ties up all the money until maturity.
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