How to use this calculator
- Deposit: the amount you’ll put in the CD.
- Rate is quoted as: choose APY if you’re entering the annual percentage yield the bank advertises (most common). Choose Interest rate if you have the nominal rate, then pick how often it compounds.
- Rate and Term: the rate and the CD’s length in months.
- Under Early withdrawal, enter the bank’s penalty in months of interest. To see what you’d get by cashing out before maturity, enter the month you’d withdraw.
The result shows the balance at maturity and the interest earned. The table below it shows what the same rate would earn over common CD terms, from 3 months to 5 years.
The CD interest formula
When you know the APY, the balance at maturity is simple to work out for any term:
D is the deposit and m is the term in months. If you have a nominal rate r compounded n times a year, convert it first:
Worked example
You put $10,000 in a 12-month CD at 4.00% APY.
- Balance at maturity: $10,000 × 1.04 = $10,400.00, so you earn $400.00 in interest.
- Over a 2-year term at the same APY, you’d earn $816.00, slightly more than twice as much, because the second year’s interest is earned on the first year’s too.
- Over 5 years, the CD would grow to $12,166.53.
If the bank’s penalty is 3 months of interest, that’s $10,000 × 4% × 3/12 = $100. Withdraw after 6 months and you’d have earned $198.04, keeping $98.04 after the penalty. Withdraw after only 2 months and you’d have earned just $65.58, so the penalty would take $34.42 of your principal.
APY vs. APR: why it matters for CDs
The interest rate (often called APR or the nominal rate) doesn’t account for compounding. APY does, which is why federal Truth in Savings rules require banks to disclose it on deposit accounts. Here’s what a 4.00% rate becomes at different compounding frequencies:
| Compounding | APY from a 4.00% rate | Interest on $10,000 in 1 year |
|---|---|---|
| Annually | 4.000% | $400.00 |
| Quarterly | 4.060% | $406.04 |
| Monthly | 4.074% | $407.42 |
| Daily | 4.081% | $408.08 |
The difference is small, but it’s real. When you shop, compare APYs. Two CDs with the same APY earn the same amount no matter how often each compounds.
Interest on $10,000 by rate and term
| APY | 1 year | 3 years | 5 years |
|---|---|---|---|
| 3.00% | $300.00 | $927.27 | $1,592.74 |
| 3.50% | $350.00 | $1,087.18 | $1,876.86 |
| 4.00% | $400.00 | $1,248.64 | $2,166.53 |
| 4.50% | $450.00 | $1,411.66 | $2,461.82 |
| 5.00% | $500.00 | $1,576.25 | $2,762.82 |
When a CD makes sense
A CD trades flexibility for a guaranteed rate. That works well for money with a known date attached: a house down payment in two years, tuition due next fall, or a cash cushion for the first years of retirement. You know exactly what you’ll have and when, and the balance can’t drop the way an investment can.
It’s a poorer fit for money you might need at short notice, or for long-term goals measured in decades, where investing for growth may suit you better. The investment calculator lets you project that kind of plan. If rates fall after you open a CD, your rate stays put, which is good for you. If they rise, you’re locked in at the lower rate until maturity, which is the main argument for shorter terms or a ladder.
Tips for choosing a CD
- Match the term to when you need the money. A penalty can wipe out months of interest, so don’t lock up your emergency fund.
- Read the early withdrawal terms. Longer CDs often carry bigger penalties. Some banks offer no-penalty CDs at a slightly lower rate.
- Consider a ladder if you’re unsure about rates or timing.
- Compare with a high-yield savings account. The savings calculator shows what flexible savings would earn, and the compound interest calculator handles other compounding setups.
- Think about inflation. A CD that earns less than inflation loses buying power even as the balance grows. The inflation calculator shows how prices have changed.
Assumptions and limitations
The rate is fixed for the whole term and interest stays in the CD. The penalty is modeled as simple interest on the deposit at the rate you enter; banks calculate penalties in different ways, so check your account disclosure. Taxes on interest aren’t included.
Sources
- FDIC: Deposit insurance
- CFPB: Regulation DD (Truth in Savings)
- IRS: Publication 550, Investment Income and Expenses
This calculator is for estimates only. Your bank’s account disclosure governs the actual interest and penalties.
Frequently asked questions
How much interest will $10,000 earn in a 1-year CD?
At 4.00% APY, a $10,000 one-year CD earns exactly $400, for a balance of $10,400 at maturity. That's the point of APY. It tells you the interest you'll earn over a year with compounding already included. At 4.50% APY it would earn $450.
What's the difference between APY and APR (interest rate)?
The interest rate (sometimes called APR) is the yearly rate before compounding. APY, or annual percentage yield, includes the effect of compounding over a year. A 4.00% rate compounded daily works out to about 4.081% APY. When comparing CDs, compare APYs, because they're on the same footing no matter how often each bank compounds.
How does a CD early withdrawal penalty work?
Most banks charge a set number of months of interest if you withdraw before maturity, often more months for longer terms. The calculator figures the penalty as simple interest on your deposit at the stated rate. On $10,000 at 4%, a 3-month penalty is $100. If you withdraw very early, the penalty can be more than you've earned and come out of your principal.
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. Credit union share certificates have similar coverage through the NCUA. Insurance covers your deposit and interest earned up to that limit.
Is CD interest taxable?
Yes. Interest from a CD in a regular account is taxed as ordinary income. For a CD with a term of more than one year, the IRS generally has you report part of the interest each year as it accrues, even though you don't receive it until maturity. CDs held inside an IRA follow the IRA's tax rules instead.
What is a CD ladder?
A CD ladder splits your money across CDs that mature at different times, such as 1, 2, 3, 4 and 5 years. As each one matures, you reinvest it at the long end. That gives you regular access to part of your money while most of it earns longer-term rates.
Updated November 2026. Results are estimates for educational purposes and depend on the inputs you provide.