Certificate of Deposit (CD) Calculator
See the value at maturity of a fixed-term deposit, and its true annual yield.
12 for monthly, 4 for quarterly, 1 for annually.
- Value at maturity
- $10,939.90
- Interest earned
- $939.90
- Annual percentage yield
- 4.59%
A 4.5% stated rate compounded 12 times a year gives an annual percentage yield of 4.59%. Early withdrawal penalties are not included.
How it is calculated
A = P × (1 + r ÷ m)^(m × t), and APY = (1 + r ÷ m)^m − 1
Example: $10,000 at 4.5% compounded monthly for 24 months is worth $10,939.90, an annual percentage yield of 4.59%.
Assumptions and limitations
- The rate is fixed for the whole term, as the product describes. Check the terms.
- Early withdrawal penalties are not included.
- Deposit protection depends on the bank and the scheme that covers it, and it has limits.
What this calculator tells you
A certificate of deposit, or CD, is a savings product where you lend a bank a fixed sum for a set term at a fixed rate. This calculator shows the amount you will have at maturity, which is the end of the term, and the annual percentage yield, or APY, which is the rate that describes the whole growth in one year.
Two CDs can advertise similar rates but pay different amounts because of how often interest is added to the balance. The APY puts them on the same footing, so it is the figure to compare when choosing between offers from different institutions.
How the maturity value is worked out
Interest is usually added to the balance at a set frequency, and each addition earns interest in the periods that follow. The APY is the effective yearly rate once that compounding is included. The maturity value equals the deposit multiplied by one plus the APY, raised to the number of years in the term. For terms in whole years this is the simplest route; a part-year term is handled by using a fraction of a year as the exponent.
A worked example
Suppose you deposit 10,000 in a CD with a 4% APY for a term of two years. At the end of the first year the balance is 10,400. The second year earns 4% on that larger balance, so the balance becomes 10,816 at maturity. The interest earned is 816, which is 16 more than simple interest would give on the original 10,000 over the same two years.
Early withdrawal and penalties
A CD locks your money for the full term. Most banks charge a penalty if you withdraw early, often expressed as a number of months of interest. The penalty can take back part of the interest already earned, and in some cases part of your original deposit. The calculator assumes you hold the CD to maturity and does not model any penalty, so check the terms before you open an account.
What the calculator leaves out
Interest from a CD is normally taxable in the year it is credited, even if you do not withdraw it. Tax treatment varies by country and by account type, so the figure shown is before tax. Deposit insurance also varies: many countries protect bank deposits up to a set limit per depositor, and that limit and its rules should be checked with your bank and the relevant authority.
Rates on new CDs change over time. A rate that looks attractive today may not be available when your current term ends, and the rate on renewal is not guaranteed. Inflation can also reduce what the money will buy, so a fixed return is only a real gain if it is higher than the inflation you expect.
Comparing a CD with other savings
A certificate of deposit is one option among several for money you will not need for a set period. Savings accounts with no fixed term can pay a rate that moves with market conditions, while government bonds may offer different tax treatment and liquidity. Compare the after-tax return and the access to the money, not only the stated rate.
Using the result
Use the maturity value to decide whether a CD meets a savings goal on a fixed date, and use the APY to compare offers of different terms and compounding frequencies. If you might need the money before the term ends, consider a shorter term or a savings account that allows withdrawals, even at a slightly lower rate, because the penalty for leaving early can cost more than the extra interest earns.
Frequently asked questions
What is the difference between APY and the interest rate on a CD?
The interest rate is the stated rate. The APY includes the effect of compounding over one year, so it is the better figure for comparing offers that add interest at different frequencies.
Does this calculator include early withdrawal penalties?
No. It assumes the CD is held to maturity. Check the early withdrawal penalty in the account terms, because it can reduce both interest and some of the original deposit.
Is CD interest taxed?
In many countries interest is taxed as income in the year it is credited, whether or not you withdraw it. The rules vary, so check the tax treatment where you live.
Is my money safe in a CD?
Many countries insure bank deposits up to a set limit per depositor, but the limit and the rules differ. Confirm the protection that applies to your bank and account type before depositing a large sum.
Should I choose a longer CD for a higher rate?
A longer term often pays a higher rate, but it locks your money for longer. Choose a term that matches when you will need the money, and compare the penalty for leaving early with the extra interest you would earn.