Work out what a certificate of deposit pays: maturity value, total interest, effective APY, the cost of cashing out early, and how a CD ladder compares.
Optional. Banks charge a penalty in months of interest — enter the bank's penalty and when you would cash out.
Estimates only. Rates, compounding method and early-withdrawal penalties are set by each bank and vary; interest is taxable in the year it is credited. Confirm the terms on the account disclosure before you deposit.
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A certificate of deposit locks a fixed rate for a fixed term, so unlike a savings account you can know the exact ending balance the day you open it. This calculator gives you that number — maturity value, total interest and the effective APY once compounding is counted — and then the two things a rate table never shows you: what an early withdrawal would cost, and whether a CD ladder beats a single long CD.
A CD is a deposit account that pays a fixed interest rate in exchange for leaving the money untouched for a set term, from a few months to five years or more. Banks pay more than they do on savings because the term is committed. Deposits at an FDIC-insured bank are protected up to $250,000 per depositor, per bank, per ownership category. The trade is liquidity: taking the money out early triggers a penalty set by the bank, usually quoted as a number of months of interest.
CD maturity formula
Money needed on a known date — a closing, a tuition bill, a tax payment — where the ending balance has to be certain rather than merely likely.
Split the deposit into rungs that mature a year apart. You give up some yield in exchange for a maturity every year, which you can spend or roll into a new CD at whatever rates then are.
A CD fixes the rate for the whole term. When rates are expected to fall, a longer CD keeps paying the old rate while savings accounts reprice downward.
A no-penalty CD lets you withdraw early at a lower rate; a bump-up CD allows one rate increase mid-term. Both cost yield — this calculator lets you price that gap exactly.
Splitting a large deposit across banks keeps each balance under the $250,000 insured limit. Run each piece separately to see the combined return.
Two CDs advertising 4.25% pay different amounts if one compounds daily and the other annually. The APY is what makes them comparable, and it is the number this calculator solves for.
When short terms pay more than long ones — an inverted curve, which is common — a 6-month CD can beat a 5-year CD on both yield and flexibility. The term table shows all six side by side.
Federal rules set a minimum penalty but no cap, and nothing stops it exceeding the interest you have earned. Break a CD that early and the shortfall comes out of your deposit — you get back less than you put in.
CD interest is ordinary income in the year it is credited, even on a multi-year CD you have not cashed out. The maturity value here is before tax.
At 4.25% compounded daily, a $10,000 CD pays about $434 over one year, $887 over two years and $2,367 over five. The number moves with the rate and the term far more than with the compounding method — daily compounding adds roughly $4 a year on $10,000 versus annual compounding at the same rate.
The interest rate is what the bank pays before compounding. The APY folds in how often that interest is added to the balance, so it is what you actually earn over a year. At 5% the APY is exactly 5% compounded annually and about 5.127% compounded daily. US banks are required to publish the APY precisely so the two can be compared.
Banks quote the penalty in months of interest — commonly 3 months on a 1-year CD and 6 to 12 months on a 5-year CD. Federal regulation sets a floor — at least seven days of simple interest on money withdrawn within the first six days after deposit (12 CFR 204.2) — but no ceiling, and nothing requires the penalty to stop at the interest you have earned, which is why disclosures warn that a penalty may reduce principal. Enter the penalty above to see the exact figure for your CD.
Not to market movements — the rate is fixed and the deposit is insured to $250,000 at an FDIC member bank. You can lose money two other ways: cashing out early when the penalty exceeds the interest earned, which reduces your principal, and inflation running above your rate, which lowers what the money buys even as the balance grows.
A ladder trades yield for access. At the same rate, splitting a deposit into five rungs maturing a year apart always returns less than one five-year CD, because the shorter rungs compound for less time. What you get is a maturity every year, without a penalty, and a rolling average rate rather than a single bet on one day. The ladder table above prices that trade on your own numbers.
Yes. CD interest is ordinary income, taxed in the year it is credited to the account rather than the year you cash out — so a multi-year CD generates a 1099-INT each year. Interest inside an IRA CD is not taxed as it accrues. State tax treatment follows the same rule as other bank interest.
Sometimes, and it changes with the rate cycle. A CD fixes its rate for the whole term while a savings rate can be cut at any time, so a CD wins when rates are falling and a savings account wins when they are rising. Compare the CD APY here against the savings APY you are being offered, and weigh the penalty against the value of being able to withdraw.
Most banks give a grace period, typically 7 to 10 days, in which you can withdraw the money, add to it or move it without penalty. Do nothing and the CD usually renews automatically for the same term at whatever rate is current — which can be well below the rate you had. Diary the maturity date.