CD Calculator (Certificate of Deposit)
Compute the maturity value and interest earned on a bank certificate of deposit (CD), given deposit amount, APY, compounding frequency, and term.
Last updated: September 2026
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About this calculator
A certificate of deposit (CD) pays a fixed interest rate for a set term. The maturity value uses the compound interest formula A = P × (1 + r/n)^(n·t), where P is the deposit, r is the APY as a decimal, n is compoundings per year, and t is years. APY (annual percentage yield) already accounts for compounding within the year, so a 4.5% APY CD compounded daily earns effectively 4.5% per year — the compounding-frequency choice mostly matters when the bank quotes an APR (interest rate) instead of an APY.
CDs trade liquidity for a higher rate than a regular savings account. Early withdrawal typically costs 3–6 months of interest. Federally-insured CDs (FDIC in the US, up to $250 000 per depositor per bank) are among the lowest-risk investments available. Laddering — splitting a lump sum across CDs with staggered maturities (1-yr, 2-yr, 3-yr, 4-yr, 5-yr) — captures the higher rates of longer terms while keeping some cash accessible every year.
How to use
Example — $10 000 for 5 years at 4.5% APY daily compounding. Formula: 10 000 × (1 + 0.045/365)^(365 × 5) = 10 000 × 1.2523 = $12 523. Interest earned = $2 523. Example — the same $10 000 at 4.5% simple interest. 10 000 + 10 000 × 0.045 × 5 = $12 250. The daily-compounding CD earns $273 more over 5 years, worth about 2.7% extra return. In practice most CDs quote APY, so the compounding choice above is a display detail — the compounded 4.5% APY equals 4.5% simple over one year by definition.
Frequently asked questions
What is the difference between APY and APR on a CD?
APY (annual percentage yield) is the effective return including compounding within the year, while APR (annual percentage rate) is the nominal rate before compounding. For CDs, the bank almost always quotes APY, so you can plug it in directly — the compounding frequency then affects the display but not the annualized return.
Are CD earnings taxable?
Yes. Interest is reported on Form 1099-INT and taxed as ordinary income at your marginal federal + state rate, even if it stays in the CD (the interest is imputed each year). Municipal-bond funds are the closest tax-advantaged alternative for parking cash.
What is a CD ladder?
A CD ladder spreads a lump sum across CDs of staggered maturities — for example, 20% into each of 1-yr, 2-yr, 3-yr, 4-yr, 5-yr CDs. Each year one CD matures and you can reinvest it at the current 5-yr rate. This captures most of the long-term rate benefit while keeping annual liquidity.
What happens if I withdraw early?
Most banks charge an early-withdrawal penalty of 3–12 months of interest depending on term. On a low-rate CD this can wipe out your entire earnings. Read the CD terms before locking in, and consider a no-penalty CD or a high-yield savings account if you may need the money.