CD calculator

A certificate of deposit (CD) pays a fixed rate for a set term, such as 6 months, 1 year or 5 years, in exchange for leaving your money untouched. This calculator shows:

• interest earned over the term,
• the balance at maturity,
• the annual yield with compounding across renewals (APY),
• interest and yield after tax, if you choose a tax rate.

If you plan to roll the CD over, set the number of terms: interest from each term is added to the balance and earns interest in the next one. Everything is calculated in your browser. The results are estimates for planning and are not financial advice.

Deposit $10,000 at 4% for a 12-month term:

• Interest: 10,000 × 4% × 12/12 = $400
• Balance at maturity: $10,400
• At a 22% tax rate, about $88 goes to tax, leaving $312.

Choose a 6-month term at the same 4% and renew it once: the first term earns $200, the second earns 2% on $10,200, or $204. After a year you have $10,404, an effective yield of 4.04%, because the first term's interest compounded.

Banks advertise CDs by APY (annual percentage yield), which includes compounding. Many CDs compound daily or monthly, so the APY is slightly higher than the stated interest rate. If you enter the bank's APY with a 12-month term, the calculator's yearly result matches the bank's figure closely.

For short terms, remember that the rate is annual: a 3-month CD at 4% earns about 1% of the deposit over those 3 months, not 4%.

CD interest is generally taxed as ordinary income in the year it is credited, and banks report it on Form 1099-INT. If the CD is held in an IRA, taxes follow the IRA's rules instead.

CDs at FDIC-insured banks, and share certificates at federally insured credit unions (NCUA), are protected up to $250,000 per depositor, per institution, per ownership category. Spreading larger amounts across banks or ownership categories keeps more of it insured.

• Early withdrawal penalties. Taking money out before maturity usually costs several months of interest. Only lock up money you will not need.
• CD ladders. Splitting money into CDs that mature at different times, for example 1, 2, 3, 4 and 5 years, gives regular access to part of your money while capturing longer-term rates.
• Automatic renewal. Many CDs renew at the bank's current rate unless you act during the grace period after maturity. Note the date.
• Compare with alternatives. High-yield savings accounts and Treasury bills may offer similar yields with different access rules.

For long-term savings with regular deposits, see the compound interest calculator.

A CD suits money you will not need until a known date, such as a down payment next year or tuition due in two years. You lock in a rate, so if rates fall, your CD keeps paying the old rate; if rates rise, you are stuck with the lower one until maturity. Shorter terms or a ladder keep you flexible. For an emergency fund, a savings account you can access at any time is usually a better fit than a CD.