What the Savings Account vs CD Calculator does
This calculator puts a certificate of deposit (CD) and a high-yield savings account side by side so you can see which one grows your money more over the same period. You enter one deposit amount, the advertised annual percentage yield (APY) for each account, and the number of years you plan to leave the money untouched. The tool then shows each account's final balance, the interest it earns, and the dollar difference between the two options.
A CD locks your money for a fixed term at a fixed rate, while a savings account keeps your money accessible but usually pays a rate that can change over time. Comparing them by APY on the same deposit is the fairest way to see the trade-off in plain dollars.
How to use it
- Deposit Amount — the sum you would put into either account.
- CD Rate (APY %) — the annual percentage yield quoted for the certificate of deposit.
- Savings Account (APY %) — the annual percentage yield quoted for the savings account.
- Time Period (years) — how long you plan to keep the deposit invested, which is usually the CD term.
Because both rates are entered as APY, compounding is already built in, so the projected growth reflects interest earning interest each year without a separate compounding setting.
The formula explained
Each account grows by the compound-interest relationship, where A is the final balance, P is the deposit, r is the APY written as a decimal, and t is the number of years:
$$A = P(1 + r)^t$$The interest earned by an account is the final balance minus the original deposit:
$$I = A - P$$The calculator applies this to both accounts and reports the absolute difference between the two final balances, so you can see how much extra the better option earns.
Worked example
Suppose you deposit 10,000 dollars, the CD offers a 5% APY, the savings account offers a 4% APY, and you keep the money for 3 years. The CD grows to 10,000 x 1.05^3 = 11,576.25 dollars, earning 1,576.25 dollars in interest. The savings account grows to 10,000 x 1.04^3 = 11,248.64 dollars, earning 1,248.64 dollars. The CD therefore comes out ahead by 327.61 dollars over the three years.
Frequently asked questions
Is a CD always better than a savings account? No. A CD usually pays a higher fixed rate, but if a savings account offers a higher APY, or if you might need to withdraw the money early, the savings account can be the better choice. This calculator shows the dollar difference so you can decide.
Should I enter APR or APY? Enter APY (annual percentage yield). APY already includes the effect of compounding, so entering it gives an accurate year-over-year projection without a separate compounding frequency.
Does it account for early-withdrawal penalties or rate changes? No. It assumes each rate stays constant for the full term and that you do not withdraw early. A CD typically charges a penalty for early withdrawal, and a savings account rate can move up or down, so treat the result as a clean like-for-like estimate.
