A certificate of deposit trades flexibility for certainty: you agree to leave money with a bank for a fixed term, and in return the rate is locked until maturity. That makes CD math refreshingly exact. This calculator shows the maturity value, the interest you will earn, the after-tax interest if you enter your tax rate, and how the balance builds month by month.
How to use the CD calculator
- Enter the deposit amount.
- Enter the term in months or years — 3, 6, 12, 18, 24 and 60 months are common.
- Enter the rate and tell the calculator whether it is the APY or the interest rate (APR).
- Choose the compounding frequency. It matters only when you enter an APR; an APY already includes compounding, so the calculator uses it to show the equivalent APR.
- Optionally add your tax rate on interest to see what you keep.
CD interest formula
Because the APY is the true one-year growth rate, the maturity value for any term is:
where P is the deposit and t is the term in years (months ÷ 12). When you start from a nominal rate compounded m times a year, convert first:
Worked example
You put $10,000 into an 18-month CD at 4.10% APY.
- Term in years: 18 ÷ 12 = 1.5
- Maturity value: $10,000 × 1.0411.5 = $10,621.26
- Interest earned: $621.26, about $34.51 a month on average
- At a combined 24% tax rate, you keep $472.16 of that interest
If the same bank instead advertised a 4.10% interest rate compounded daily, the APY would be about 4.185% and the CD would pay $634.27 — a reminder to check which number you are looking at.
Comparing CD terms
Longer terms usually pay a different rate than shorter ones, so plug in each offer separately. The second table under the calculator shows what your deposit would earn at the same APY over common terms, which is handy as a baseline. When rates are expected to fall, locking in a longer term protects your yield; when they are expected to rise, shorter terms keep your money available to reinvest.
Building a CD ladder
A ladder splits one deposit across several maturities — for example, $10,000 divided into five $2,000 CDs maturing in one, two, three, four and five years. Each year one rung matures; you can spend it or roll it into a new five-year CD at the top of the ladder. You get access to part of your money every year while most of it earns longer-term rates.
Early withdrawal penalties
The trade-off for a guaranteed rate is the penalty for breaking the term early. Penalties are typically quoted as a number of days or months of interest and grow with the length of the CD. On the example above, six months of interest is about $203, nearly a third of the full-term interest. Read the deposit agreement before you buy, and keep emergency money in a savings account instead. No-penalty CDs exist, usually at a lower rate.
CDs and inflation
A CD guarantees dollars, not purchasing power. If inflation runs at 3% while your CD earns 4.1%, your real return is only about 1%, and less after tax. The investment inflation calculator shows the real, after-tax picture.
Results are estimates for planning only and are not financial advice. Your bank's disclosures govern the actual rate, compounding, crediting dates and penalties.
Frequently asked questions
How is CD interest calculated?
The deposit grows at the annual percentage yield for the length of the term: maturity value = deposit × (1 + APY)^(months ÷ 12). If you only know the interest rate (APR) and compounding frequency, the APY is (1 + APR ÷ m)^m − 1.
What is the difference between a CD's APY and its interest rate?
The interest rate is the nominal annual rate; the APY adds the effect of compounding during the year. With daily compounding, a 4.10% interest rate produces about a 4.185% APY. Always compare CDs by APY.
What happens if I withdraw money from a CD early?
Most banks charge an early withdrawal penalty, usually a set number of days or months of interest that grows with the term. On a short CD the penalty can wipe out most of the interest earned so far, and in some cases dip into principal.
Are CDs insured?
CDs at FDIC-member banks and NCUA-insured credit unions are covered up to $250,000 per depositor, per institution, per ownership category. Brokered CDs bought through a brokerage account are also FDIC-insured if the issuing bank is a member.
Do I pay tax on CD interest before the CD matures?
Generally yes. For CDs longer than one year, US taxpayers usually report interest as it accrues each year, even though the money stays in the CD. The bank reports it on Form 1099-INT.