How to Use Our CD Calculator
Our calculator is simple and requires just three pieces of information to project your earnings.
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Initial Deposit: Enter the amount of money you plan to deposit into the CD. This is your principal investment.
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CD Term: This is the length of time you agree to leave your money in the bank. Common terms range from 3 months to 5 years. Select the term for the CD you are considering.
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APY (Annual Percentage Yield): This is the most important number for comparing CDs. APY is the effective annual rate of return, including the effect of compounding. Enter the APY advertised by the bank.
Understanding Your Results
The calculator will show you the two most important outcomes of your CD investment.
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Total Interest Earned: This is the profit your money will generate over the CD’s term. Because CDs offer a fixed APY, this earning amount is guaranteed, unlike other investments.
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Final Balance: This is the total amount you will have when the CD matures. It is the sum of your initial deposit and the total interest you earned. Final Balance = Initial Deposit + Total Interest Earned.
The Power of a Higher APY
Even a small difference in APY can have a significant impact on your earnings, especially with larger deposits. See how a $10,000 deposit in a 2-year (24-month) CD changes with different rates.
This table clearly shows why it pays to shop around for the highest APY you can find. A single percentage point difference on this $10,000 deposit means an extra $312 in guaranteed earnings.
Frequently Asked Questions
What is a Certificate of Deposit (CD)?
A Certificate of Deposit, or CD, is a special type of savings account offered by banks and credit unions. You agree to deposit a lump sum of money for a fixed period of time (the “term”), and in exchange, the bank pays you a fixed interest rate, which is typically higher than a regular savings account. Your money is FDIC-insured (up to $250,000 per depositor, per bank), making it a very safe way to save. The main trade-off is liquidity; you cannot easily withdraw the money before the term ends without paying a penalty.
What is the difference between APY and interest rate?
While related, APY (Annual Percentage Yield) is the more important number for a saver.
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Interest Rate: This is the base rate at which interest is calculated.
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APY (Annual Percentage Yield): This is the total return you will earn in a year, including the effect of compound interest.
Concrete Example: A CD might have a 4.9% interest rate that is compounded daily. Because the interest earned each day is added to the balance and then earns interest itself, the effective annual yield (APY) will be slightly higher, perhaps 5.0%. Always use the APY to make an apples-to-apples comparison between different CDs.
What happens if I withdraw my money from a CD early?
Withdrawing your money before the CD’s term is over will trigger an early withdrawal penalty. The penalty varies by bank but is typically a set amount of interest.
Concrete Example: You have a $5,000, 1-year CD with a 4% APY, and the penalty is 90 days (3 months) of simple interest. If you withdraw early, the penalty would be roughly ($5,000 * 0.04) * (90/365) = $49.31. This penalty amount would be subtracted from your balance. In some cases, if you withdraw very early, the penalty could dip into your original principal.
What should I do when my CD matures?
When your CD term ends, you have a “grace period,” usually 7 to 10 days, to decide what to do next. Your options are:
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Withdraw the Money: You can cash out the principal and the interest with no penalty.
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Renew or “Roll Over” the CD: You can reinvest the entire balance into a new CD of the same term. The interest rate will be reset to whatever the bank is currently offering for that term.
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Roll Over into a Different CD: You can take the money and put it into a new CD with a different term length to better suit your needs or capture better rates.
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Build a CD Ladder: This is a strategy where you own multiple CDs with staggered maturity dates (e.g., 1-year, 2-year, 3-year). As each CD matures, you have access to cash if you need it or can reinvest it at current rates, giving you a blend of high rates and liquidity.
Are CDs a good investment right now?
As of July 2025, interest rates remain relatively high compared to the previous decade, making CDs an attractive option for savers seeking safety and guaranteed returns. With many high-yield savings accounts and CDs offering APYs that are beating the current rate of inflation, they are an excellent tool for short- to medium-term goals (1 to 5 years) where you cannot risk losing principal, such as saving for a house down payment or a car.
However, for long-term goals like retirement (10+ years away), the returns from CDs are unlikely to keep pace with the historical returns of the stock market. CDs are best used for capital preservation and predictable growth, not for high-powered, long-term wealth building.
Next Steps in Your Financial Journey
After calculating your potential CD earnings, compare them to other options with our Savings Calculator to see how it stacks up against a high-yield savings account. For your longer-term goals, see how your money could grow faster with our Compound Interest Calculator.
