US CD Calculator
See what a certificate of deposit earns by maturity, what an early withdrawal would cost, the interest after tax and inflation, and how a CD ladder works out.
Each bank sets its own penalty. Typical examples: about 3 months of interest on CDs of a year or less, and 6 to 12 months on longer ones. Check your CD's terms.
Balance by month and year
How your CD is worked out
Balance = deposit × (1 + rate ÷ periods)^(periods × years).
- 1
Rate each period
4.25% APY= 4.1624% rate÷ 365 days= 0.011404%
- 2
Growth over the term
(1 + 0.00011404)^365= 1.042500
- 3
Balance at maturity
$10,000.00× 1.042500= $10,425.00
- 4
Interest earned
$10,425.00− $10,000.00= $425.00
Read more: the formula, a worked example, APY vs rate, penalties, ladders and FDIC
A certificate of deposit (CD) is a savings account that locks your money away for a set term, such as 6 months or 5 years, at a fixed rate. In return for not touching it, you usually get a higher rate than an ordinary savings account. At the end (maturity) you get your deposit back plus the interest.
The formula
balance = deposit × (1 + rate ÷ periods a year)^(periods a year × months ÷ 12)
interest = balance − deposit
APY = (1 + rate ÷ periods)^periods − 1
rate = periods × ((1 + APY)^(1 ÷ periods) − 1)
penalty = deposit × rate × months ÷ 12 (or × days ÷ 365)
Worked example
$10,000 in a 12-month CD at 4.25% APY, compounded daily. The interest rate behind that APY is 365 × (1.04251/365 − 1) = 4.1624%, which is 0.011404% a day. Over 365 days the deposit grows by (1 + 0.00011404)365 = 1.0425, so the balance at maturity is $10,000 × 1.0425 = $10,425.00 and the interest is $425.00.
Cashing out early
Say the same CD has a penalty of 3 months of interest and you cash out after 6 months. By then it has earned $10,000 × (1.00011404)182.5 − $10,000 = $210.29. The penalty is $10,000 × 4.1624% × 3 ÷ 12 = $104.06, so you get $10,106.23 back. The interest covers the penalty from month 3; cash out before that and the penalty eats into your deposit. Many banks work the penalty out slightly differently (on the amount withdrawn, or in days), so check your terms.
APY or interest rate?
The APY already includes the interest earned on interest, so it is the fair way to compare CDs. The interest rate (sometimes shown as APR) is the rate before compounding. A 5% rate compounded monthly is (1 + 0.05 ÷ 12)12 − 1 = 5.1162% APY.
Tax and inflation
CD interest is usually taxed as ordinary income, federally and by most states, in the year it's paid or credited, even if you leave it in the CD. With 22% federal and 5% state tax, the $425.00 above becomes $310.25 after tax. If inflation runs at 3%, that after-tax $10,310.25 is worth $10,009.95 in today's money, a real return of about 0.10% a year.
CD ladders
A ladder splits your money across CDs with different terms, so one matures at regular gaps. $10,000 in five rungs of $2,000 for 1, 2, 3, 4 and 5 years at 4.25%, 4.00%, 3.90%, 3.85% and 3.80% APY grow to $2,085.00, $2,163.20, $2,243.24, $2,326.25 and $2,410.00, which is $1,227.69 of interest. When a rung matures you can spend it or roll it into a new long CD. Putting it all in the 5-year CD would earn $2,049.99, but your money would be locked up for the full 5 years.
| Type of CD | What's different |
|---|---|
| Traditional | Fixed rate and term, penalty if you cash out early. |
| No-penalty | You can cash out after a short wait without a penalty, usually for a lower rate. |
| Bump-up | Lets you move to a higher rate if the bank's rates rise, often once. |
| Jumbo | For large deposits, often $100,000 or more. |
| Brokered | Bought through a brokerage; sold on the market instead of paying a penalty, so the price can move. |
FDIC insurance covers deposits at insured banks up to $250,000 per depositor, per insured bank, for each account ownership category (FDIC). Credit union CDs are covered by the NCUA instead. Penalty figures on this page are typical examples, not rules: each bank sets its own. Balances part way through a period include the interest earned so far; banks credit it at the end of each compounding period, so their monthly figures can differ by a few cents.
Common questions
How is CD interest calculated?
Banks grow your deposit by the interest rate divided by the number of compounding periods, once every period, for the whole term. With an APY you can skip that step: $10,000 in a 12-month CD at 4.25% APY grows to $10,425.00, so you earn $425.00 in interest. For other terms, the balance is deposit × (1 + APY)^(months ÷ 12).
What is the difference between APY and the interest rate?
The interest rate (sometimes called APR) is the yearly rate before compounding. The APY (annual percentage yield) includes the interest you earn on interest during the year. A 4.25% APY with daily compounding is a 4.1624% interest rate, and a 5% rate compounded monthly is a 5.1162% APY. Compare CDs by APY, because it already allows for compounding.
What happens if I take money out of a CD early?
Most banks charge an early withdrawal penalty, usually a set number of months or days of interest. On $10,000 at 4.25% APY for 12 months, cashing out after 6 months with a 3-month penalty means you earned $210.29, pay a $104.06 penalty and get $10,106.23 back. Cash out very early and the penalty can come out of your deposit.
Is CD interest taxed in the US?
Yes. CD interest is usually taxed as ordinary income in the year it is paid or credited, by the federal government and most states. In a 22% federal and 5% state tax bracket, the $425.00 earned on $10,000 at 4.25% APY for a year leaves $310.25 after tax, an after-tax yield of about 3.10%.
What is a CD ladder?
A CD ladder splits your money across several CDs that mature at different times, so some cash comes free regularly. $10,000 split into five $2,000 CDs of 1 to 5 years at 4.25%, 4.00%, 3.90%, 3.85% and 3.80% APY earns $1,227.69 in all, and one CD matures every year that you can spend or reinvest.
Are CDs FDIC insured?
CDs at FDIC-insured banks are covered up to $250,000 per depositor, per insured bank, for each account ownership category, and that includes the interest earned. If your deposit plus interest will go over that, you can spread the money across banks or ownership categories. Credit union CDs are insured separately by the NCUA.
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