How it works
A certificate of deposit pays a fixed rate for a fixed term in exchange for leaving your money untouched. Banks usually advertise the APY (annual percentage yield), which includes compounding, alongside the nominal interest rate.
If you know the APY, enter it directly; the calculator converts it back to the nominal rate for your compounding frequency. Either way, the ending balance is the same.
Withdrawing before maturity usually triggers an early withdrawal penalty, often several months of interest. Interest on CDs is taxable as ordinary income in the year it is credited, unless held in an IRA.
Formula
APY = (1 + r/k)^k − 1; ending balance = deposit × (1 + r/k)^(k × years)
Questions people ask
What is the difference between APY and interest rate?
The interest rate is the nominal annual rate. APY includes compounding within the year, so a 5% rate compounded monthly is a 5.116% APY.
Are CDs FDIC insured?
CDs at FDIC-member banks are insured up to $250,000 per depositor, per bank, per ownership category. Credit union CDs have equivalent NCUA coverage.
What is a CD ladder?
Splitting money across CDs with staggered maturities (for example 1 to 5 years) so part of it becomes available each year while longer CDs earn higher rates.