calcanswers.com All calculators

CD Calculator

Finance

Enter your deposit, the APY or interest rate, how often interest compounds and the term in months. You see how much your savings could grow: interest earned, value at maturity, the effective APY and a growth table, with an optional tax rate.

The amount you put into the CD.

Rate type

APY already includes compounding. An interest rate (sometimes called APR or nominal rate) does not, so you also choose how often it compounds.

The APY or the interest rate from your offer, whichever you picked above.

In months: 12 months is 1 year, 60 months is 5 years.

Your marginal federal plus state rate on interest income. Leave at 0 to ignore taxes.

Use a period for decimals, like 12.5. Commas for thousands are fine. The result updates as you type.Decimals with a period, like 12.5

Your entries stay on your device. The math runs right in your browser.

Result: Value at maturity

$10,425.00

A $10,000 CD at 4.25% for 12 months grows to $10,425.00. You earn $425.00, about $35.42 a month, at an effective APY of 4.25%.

  • Interest earned: $425.00
  • Effective APY: 4.25%
  • Average interest per month: $35.42
  • Interest after tax: $425.00
  • Balance after tax: $10,425.00

CD interest and balance over the term

Growth over the term
MonthInterest in periodBalance
1$34.74$10,034.74
2$34.87$10,069.61
3$34.99$10,104.60
4$35.11$10,139.71
5$35.23$10,174.94
6$35.35$10,210.29
7$35.48$10,245.76
8$35.60$10,281.36
9$35.72$10,317.09
10$35.85$10,352.93
11$35.97$10,388.90
12$36.10$10,425.00

Step by step

$10,000 grows at an effective 4.25% a year for 12 months to $10,425.00

  1. Effective yearly rate: the APY is 4.25%. If you entered an interest rate, this is its equivalent after compounding.
  2. Term: 12 months divided by 12 gives the number of years.
  3. Value at maturity: $10,000 × (1 + 4.25%) raised to the number of years = $10,425.00.
  4. Interest earned: $10,425.00 minus $10,000 = $425.00, about $35.42 a month. After tax at 0% you keep $425.00, a balance of $10,425.00.

Formula

value = deposit × (1 + APY)months / 12
APY = (1 + r / k)k - 1
interest = value - deposit
APY
annual percentage yield as a decimal, 0.0425 for 4.25%
r
stated interest rate as a decimal
k
compounding periods per year: 365, 12, 4, 2 or 1
months
term in months, so months / 12 is the term in years

How it works

A certificate of deposit (CD) is a time deposit: you leave a set amount with a bank or credit union for a fixed term, and it pays interest. Interest is added to the balance on each compounding date, daily or monthly for many CDs, and then earns interest itself. To compare offers, banks quote the annual percentage yield (APY), the total interest earned over a year including compounding. Regulation DD defines it as 100 × [(1 + interest / principal)^(365 / days in term) - 1].

Pick APY and the balance grows by (1 + APY) for every year of the term, so $10,000 at 4.25% APY for 24 months becomes $10,868.06, which is $868.06 of interest. Pick interest rate and the calculator first turns it into an APY with your compounding: 5% compounded daily is a 5.13% APY. Terms are counted in months and a month is one twelfth of a year, so a 12-month CD is exactly one year. $10,000 in a 6-month CD at a 4% APY earns $198.04.

The result is an estimate. Banks count the actual days in your term, as Regulation DD does for the APY, and use their own rounding, so your statement can differ by a small amount, and by more on a larger deposit. A 6-month term covers 181 to 184 days, while the calculator counts it as half a year, 182.5 days. At a 4% APY, $10,000 earns about $196.40 to $199.68 over those terms instead of the $198.04 above, a gap of up to $1.64, or about $16 on $100,000. The rate is fixed for the term, nothing is withdrawn early and no deposit is added after opening. Tax is applied to the total interest at the one rate you enter, as if you paid it from other money; the calculator does not model in which year each part of the interest is taxed. For regular monthly savings use the compound interest calculator; for a plain interest amount use the interest calculator.

The formula

If you enter an APY the first line is used as it stands. If you enter an interest rate, the second line converts it: 5% compounded daily gives (1 + 0.05 / 365)^365 - 1 = 5.127%. Both lines agree with the relation behind Regulation DD, where interest equals principal × ((1 + APY)^(days / 365) - 1).

The after-tax figures subtract tax rate × interest from the interest. The growth table shows the balance month by month for terms up to 24 months and year by year after that, with the maturity value in the last row. Nothing is rounded until the result is displayed.

Example

What does a $10,000 CD earn at a 4.25% APY over 24 months?

  1. The APY is 4.25%, so each year the balance grows by that percentage.
  2. After two years: $10,000 × (1 + 4.25%)² = $10,868.06.
  3. The interest is $868.06, or $36.17 a month on average. With 22% tax on the interest you keep $677.09.

A $10,000 CD at 4.25% for 24 months grows to $10,868.06. You earn $868.06, about $36.17 a month, at an effective APY of 4.25%.

Load this example into the calculator

Frequently asked questions

How much will $10,000 make in a 6 month CD?

At a 4% APY, $10,000 earns about $198 in six months, $210 at 4.25%, $223 at 4.5% and $247 at 5%, before taxes. The formula is $10,000 × ((1 + APY)^0.5 - 1). A bank counts the actual days of the term, which puts the 4% figure between about $196 and $200. A shorter term earns proportionally less, so compare the APY first and the term second.

Is a 4% CD good right now?

It depends on today’s market and the term, which change often. Compare the APY with the national average CD rates the FDIC publishes every month for each term, with offers from online banks and credit unions, and with inflation: a rate above inflation grows your buying power. At a 4% APY, $10,000 earns $400 in a year before taxes.

Who has a 9.5% APY CD?

A calculator cannot tell you who pays what. A 9.5% APY would be far above what FDIC-insured banks and NCUA-insured credit unions normally offer, so check the full terms and confirm the institution is insured before you deposit. For reference, $10,000 at a 9.5% APY for one year earns $950.

How do I calculate how much money my CD will make?

Multiply the deposit by (1 + APY) raised to the term in years, then subtract the deposit. For $10,000 at 4.25% APY for 2 years that is $10,000 × 1.0425^2 = $10,868.06, so the CD makes $868.06. The calculator above does this for any deposit, rate and term.

What is a certificate of deposit?

It is a savings product where you agree to leave money with a bank or credit union for a fixed term, from a few months to several years, in exchange for a set rate. Taking the money out early usually costs a penalty. The FDIC lists CDs among the insured deposits at FDIC-insured banks.

How is CD interest calculated and compounded?

The bank applies the rate to the balance each period. Many CDs are compounded daily or monthly, so interest is added to the balance and earns interest itself. The APY folds the compounding into one yearly figure: a 4% interest rate compounded daily is a 4.08% APY. Your account terms must state how often interest is compounded.

What is APY on a CD?

APY, the annual percentage yield, is the interest you earn in a year as a percentage of the deposit, with compounding included. Regulation DD sets the formula, so APYs of different banks can be compared fairly. A higher APY earns more over the same term, even if its stated interest rate looks lower.

What happens to CD interest if I withdraw early?

Banks charge an early withdrawal penalty, often a number of months of interest, and Regulation DD requires them to disclose how it is calculated. If you have earned less interest than the penalty, it can reduce your deposit. As an example, three months of interest at 4.25% on $10,000 is about $106. Read your account agreement.

Are CDs insured, and is the interest taxed?

Yes to both. The FDIC insures CDs up to $250,000 per depositor, per insured bank, per ownership category, and the NCUA does the same for share certificates at insured credit unions. CD interest is generally taxable income, and the bank reports interest of $10 or more. Interest paid or credited at least yearly, or earned on a CD of one year or less, is taxed when you receive it or can withdraw it without a substantial penalty (Form 1099-INT). If interest is deferred for more than a year, as on a longer CD that pays only at maturity, you include a part of it each year as original issue discount (Form 1099-OID), even before you receive it. A tax professional can say how your CD is treated.

Last updated: Responsible editor: Jared Alan
Checked against 15 test cases · How we test
Sources: