CD Calculator

A CD is the US cousin of a term deposit. You hand a bank or credit union a fixed amount for a defined term — common terms run from three months to five years — and in exchange you get a fixed interest rate that does not change for the life of the certificate. Deposits are insured up to the federal limit by the FDIC at banks or the NCUA at credit unions, which is what makes a CD one of the lowest-risk places to hold cash you do not need immediately.

The number that matters most when you shop for a CD is the APY, the annual percentage yield. The APY already bakes in the effect of compounding, so it is the honest, apples-to-apples figure for comparing one CD against another. The nominal rate, by contrast, is the headline rate before compounding is accounted for: a CD compounding daily at a given nominal rate will quote a slightly higher APY than the nominal rate itself. This calculator shows you both — enter the rate the bank advertises, pick how often it compounds, and the note reports the implied APY so you can see exactly how much the compounding adds.

Generally CDs pay more than ordinary savings accounts because you give up access to the money for the term. The longer the term and the larger the deposit, the higher the rate a bank will usually offer. Some institutions offer specialty structures — bump-up CDs that let you raise your rate once if market rates climb, or no-penalty CDs that let you withdraw early without a charge in exchange for a slightly lower rate.

When a CD matures you typically get a short grace period to decide what to do. If you do nothing, many banks automatically roll the balance into a new CD of the same term at the current rate, which may be higher or lower than before — so it pays to mark the maturity date and review rather than let it renew on autopilot.

The interest a CD earns is taxable in the year it is credited, even on a multi-year CD where you do not touch the money until maturity. The value shown here is before tax; subtract your own rate to estimate the net.

Open a 3-year CD with 10,000 at a 5% nominal rate compounded monthly. Using A = 10,000 · (1 + 0.05/12)^(12·3), the CD is worth about 11,614 at maturity — roughly 1,614 in interest. That 5% nominal rate compounded monthly is equivalent to an APY of about 5.12%, which is the figure you would compare against other banks’ CD offers.

The biggest catch with a CD is the early-withdrawal penalty. Pull your money out before maturity and the bank typically forfeits a chunk of interest — often several months’ worth on shorter CDs and up to a year’s interest on longer ones — and in rare cases the penalty can eat into principal if you withdraw very early. To keep some liquidity, many savers build a CD ladder: split the money across CDs maturing at staggered intervals so a portion comes due each year, can be spent if needed, or rolled into a new top-rate CD. No-penalty CDs sidestep the lock-in entirely but usually pay a lower rate.