CD Calculator (Certificate of Deposit)

Estimate how much your certificate of deposit will grow, compare CD terms and APYs, and see your effective annual yield with and without taxes.

$

Summary

Initial deposit
$10,000.00
Term
12 months
Stated rate
4.50% nominal
Effective APY
4.59%
Total interest (before tax)
$459.05
Estimated tax on interest
$0.00
Final balance (after tax)
$10,459.05

Growth over time

Period Balance Interest earned

Note: Periods follow the compounding frequency (e.g., monthly for monthly compounding).

Compare two CDs side by side

Quickly see which CD gives you a higher final balance.

CD #1

CD #2

Results

Enter details and we’ll show which CD yields more on the same deposit.

How this CD calculator works

This CD (certificate of deposit) calculator models how your deposit grows over time using compound interest. You can enter the bank’s stated interest rate, choose a compounding frequency, and optionally include taxes and reinvestment.

Compound interest formula

For a CD with compounding, the future value \(A\) after \(t\) years is:

\( A = P \left(1 + \dfrac{r}{n}\right)^{n t} \)

  • \(P\) = initial deposit (principal)
  • \(r\) = annual nominal interest rate (as a decimal, e.g. 0.045)
  • \(n\) = number of compounding periods per year (12 for monthly, 4 for quarterly, etc.)
  • \(t\) = time in years

If you choose simple interest (no compounding), the calculator uses:

\( A = P \left(1 + r t\right) \)

Effective APY vs. nominal rate

Banks often quote a nominal rate (e.g. 4.50% with monthly compounding) and an APY (Annual Percentage Yield) that includes the effect of compounding.

The APY is calculated as:

\( \text{APY} = \left(1 + \dfrac{r}{n}\right)^{n} - 1 \)

Our calculator shows both the nominal rate you enter and the resulting APY so you can compare CDs on an equal footing.

Taxes on CD interest

In many jurisdictions, CD interest is taxed as ordinary income. If you enter a tax rate on interest, the calculator:

  • Computes total interest earned before tax.
  • Applies your tax rate to estimate tax owed.
  • Shows your after-tax final balance.

This is a simplified estimate and does not account for tax brackets, deductions, or timing of recognition. Always consult a tax professional for personal advice.

How to use the CD calculator effectively

  1. Enter your initial deposit – the amount you plan to lock into the CD.
  2. Set the term – in months or years. For example, 6, 12, 18, 24, or 60 months.
  3. Enter the interest rate – use the bank’s stated annual rate (not APY) if you know the compounding frequency, or approximate it from APY.
  4. Choose compounding – most CDs compound monthly, but some use daily or quarterly compounding.
  5. Optionally add your tax rate – to see a more realistic after-tax return.
  6. Use the comparison tool – to decide between two CD offers with different terms and rates.

Understanding CD strategies

Short-term vs. long-term CDs

  • Short-term CDs (3–12 months): more flexibility, lower rates.
  • Long-term CDs (2–5+ years): higher rates, but more interest-rate and liquidity risk.

Use the calculator to see how much extra interest you earn by extending the term, and whether it compensates for reduced flexibility.

CD laddering

A CD ladder splits your money across multiple CDs with staggered maturities (e.g. 1, 2, 3, 4, and 5 years). This gives you:

  • Regular access to part of your money at each maturity.
  • Exposure to higher long-term rates without locking everything at once.

While this calculator focuses on a single CD at a time, you can model a ladder by running several scenarios and summing the results.

FAQ

What is a CD (certificate of deposit)?

A CD is a time deposit account where you agree to keep your money with a bank or credit union for a fixed period. In return, the institution pays a fixed interest rate, usually higher than a standard savings account.

Can I lose money in a CD?

If your CD is within the insured limits of a regulated bank or credit union, your principal is generally protected from bank failure. However, you can effectively “lose” money in real terms if inflation exceeds your CD’s return, or if early withdrawal penalties eat into your interest.

How big are early withdrawal penalties?

Penalties vary by institution and term, but common penalties are:

  • 3 months of interest for CDs under 1 year.
  • 6–12 months of interest for longer-term CDs.

To approximate the impact, you can shorten the term in the calculator and compare the resulting interest to the full-term scenario.

Should I choose a CD or a savings account?

CDs usually offer higher rates but lock your money. High-yield savings accounts are more flexible but may have variable rates. Use this calculator to see the guaranteed CD return and compare it to your expectations for savings account rates over the same period.