What Is a CD Calculator?
A Certificate of Deposit (CD) is a time deposit offered by banks and credit unions that pays a fixed interest rate over a set term in exchange for keeping your money locked away. This calculator estimates how much your CD will be worth at maturity and how much interest you will earn, based on your deposit, rate, term length, and how often interest compounds.
How to Use It
Enter your initial deposit, the annual interest rate (or APY) as a percentage, the term in years, and choose how often the bank compounds interest (monthly is common). The calculator instantly shows your maturity value, the original principal, and the total interest earned over the term.
The Formula Explained
The growth follows the compound interest formula $$A = P\left(1 + \frac{r}{n}\right)^{n \cdot t}$$, where \(A\) is the maturity value, \(P\) is the principal, \(r\) is the annual rate written as a decimal, \(n\) is the number of compounding periods per year, and \(t\) is the number of years. Total interest is simply \(A - P\).
Worked Example
Suppose you deposit $10,000 into a 5-year CD at a 5% annual rate compounded monthly (\(n = 12\)). Then $$A = 10{,}000 \times \left(1 + \frac{0.05}{12}\right)^{12 \times 5} = 10{,}000 \times (1.0041667)^{60} \approx \$12{,}833.59.$$ Your total interest earned is about $2,833.59.
FAQ
Is the rate the same as APY? APY already reflects compounding, so if you enter the APY, choose "Annually" for the closest match. If you enter the nominal rate, pick the bank's actual compounding frequency.
Can I withdraw early? Most CDs charge an early-withdrawal penalty, which this calculator does not account for. It assumes you hold to maturity.
Are CD earnings taxable? In most jurisdictions interest income is taxable in the year it is credited. This tool shows gross interest before any taxes.
