CD Calculator - Certificate of Deposits
| Ending Balance | $12,762.82 |
|---|---|
| Total Interest | $2,762.82 |
| Year | Balance | Interest |
|---|---|---|
| 1 | $10,500.00 | $500.00 |
| 2 | $11,025.00 | $525.00 |
| 3 | $11,576.25 | $551.25 |
| 4 | $12,155.06 | $578.81 |
| 5 | $12,762.82 | $607.75 |
Calculate how much your savings will grow with a CD investment
What is a Certificate of Deposit (CD)?
A Certificate of Deposit (CD) is a savings account offered by banks or credit unions with a fixed interest rate and a set maturity date. You agree to leave your money untouched for a certain period — typically between a few months to several years — and in return, the bank pays you interest.
CDs are known for being low-risk and guaranteed ways to grow your money, making them ideal for people looking for safe, short- or mid-term investments.
How This Calculator Helps
The CD Calculator helps you estimate how much money you’ll earn from a CD over time. It considers:
- Initial deposit amount
- CD term (length in months or years)
- Annual interest rate
- Compounding frequency (monthly, quarterly, annually)
This tool helps you:
- Compare CD options from different banks
- Plan savings goals or emergency funds
- Estimate total interest earnings before committing
How to Calculate CD Earnings Manually
The CD interest can be calculated using the compound interest formula:
Final Amount = P × (1 + r/n)^(nt)
Where:
- P = principal (initial deposit)
- r = annual interest rate (decimal)
- n = number of times interest compounds per year
- t = term in years
Example:
Deposit $10,000 for 2 years at 4% annual interest, compounded monthly:
r = 0.04, n = 12, t = 2
Final Amount = 10,000 × (1 + 0.04/12)^(12×2) ≈ $10,824.46
Total interest earned ≈ $824.46
FAQ - CD Calculator
Can I withdraw money before the CD term ends?
Yes, but you'll usually face an early withdrawal penalty, which can reduce or cancel out your interest earnings. Always check the bank’s terms before investing.
How often does interest compound?
It depends on the CD. Some compound monthly, quarterly, or annually. More frequent compounding results in slightly higher total earnings.
Are CD earnings taxable?
Yes. Even though you don’t withdraw the interest right away, any interest earned is typically subject to income tax in the year it's earned.
Is a CD better than a savings account?
CDs usually offer higher interest rates than regular savings accounts, but you must lock your money in for a fixed time. If you need flexible access to your funds, a high-yield savings account might be better.
What happens when a CD matures?
When your CD reaches the end of its term (maturity), you can withdraw your money plus interest, roll it into a new CD, or let it renew automatically (depending on the institution's policy).