CD Calculator

This calculator shows what a certificate of deposit will pay at maturity. Enter the amount you deposit, the interest rate, the term in months and how often the bank compounds interest, and it returns the maturity value, the interest earned, the effective annual yield (APY) and the average interest per month.

It is useful for comparing CD offers with different terms and compounding, checking a bank's quoted APY, and planning a CD ladder. It assumes you leave the money and interest untouched until maturity and that the rate is fixed for the whole term, which is true of standard CDs. It does not deduct tax or early withdrawal penalties.

For money you may need sooner, compare the result with a high-yield savings account using the APY calculator, or plan regular deposits toward a target with the savings goal calculator.

This is the standard compound interest formula. US banks must disclose the APY under the Truth in Savings Act (Regulation DD), calculated on the assumption that interest stays on deposit until maturity.

If a bank quotes only the APY, enter that APY with Annually compounding for terms of one year or longer and the result will match the bank's figures. CDs that pay interest out monthly instead of compounding earn the simple rate, not the APY.

A CD ladder splits your money across several CDs with staggered maturities, so part of it becomes available at regular intervals while the rest earns longer-term rates. A classic five-rung ladder puts equal amounts into 1-, 2-, 3-, 4- and 5-year CDs; each time one matures, you reinvest it in a new 5-year CD.

To see what each rung earns, run the calculator once per CD with its own rate and term, then add the interest figures together.

Most CDs charge a penalty if you take money out before maturity, usually expressed as a number of months' interest; longer CDs tend to carry bigger penalties. Some banks can take the penalty out of principal if you withdraw before enough interest has built up, so you can get back less than you put in. No-penalty CDs avoid this in exchange for a slightly lower rate. Check the deposit agreement before opening, and keep an emergency fund outside the CD.

• Tax: CD interest is taxed as ordinary income in the year it is credited to your account, even if you cannot withdraw it until maturity. Banks report it on Form 1099-INT. CDs held inside an IRA defer or avoid that tax.
• Insurance: CDs at FDIC-insured banks are covered up to $250,000 per depositor, per insured bank, per ownership category, including interest earned. Credit union share certificates have the same limit through the NCUA.
• Brokered CDs: bought through a brokerage, these can be sold before maturity on the secondary market instead of paying a penalty, but their price falls if rates have risen.