Free Financial Tool
CD Calculator
Calculate certificate of deposit maturity value, early withdrawal penalties, and compare a CD ladder vs. a single 5-year CD.
Configure your CD
Early Withdrawal
Calculate penalty if withdrawn early
Maturity Value
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Total Interest
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Effective Annual Yield
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Early Withdrawal Summary
Penalty Amount
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Net Interest
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Net Return
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CD Ladder Visualizer
Split your deposit across 5 CDs maturing at 1–5 years vs. one single 5-year CD.
How CD Interest is Calculated
A certificate of deposit earns compound interest on your deposit for a fixed term. Since CDs quote APY (the effective annual yield), the formula simplifies to:
Where P = deposit, APY = annual percentage yield (as decimal), t = term in years. The compounding frequency is already factored into the APY.
Worked Example
Deposit $10,000 at 5.00% APY, 1-year term:
- A = $10,000 × (1 + 0.05)^1 = $10,500.00
- Total interest = $500.00
- If withdrawn at month 6 with 90-day penalty: penalty ≈ $124, net interest ≈ $131
Frequently Asked Questions
What is a CD (Certificate of Deposit)?▾
A CD is a savings product offered by banks where you deposit money for a fixed term (3 months to 5 years) in exchange for a guaranteed interest rate. CDs typically offer higher rates than savings accounts but charge a penalty for early withdrawal.
What happens if I withdraw a CD early?▾
Most CDs charge an early withdrawal penalty, typically 90–365 days of interest depending on the term. For a 1-year CD, the penalty is often 90–180 days of interest. For 5-year CDs, it can be up to 365 days of interest.
What is a CD ladder?▾
A CD ladder involves splitting your deposit into multiple CDs with staggered maturity dates (1yr, 2yr, 3yr, 4yr, 5yr). As each CD matures, you reinvest at current rates. This gives you regular access to funds and reduces interest rate risk.
Are CDs worth it when interest rates are high?▾
Yes. When rates are high (like 2023-2025), locking in a high rate on a 1-2 year CD can be smart. If you think rates will fall, locking in longer terms protects your yield. Use a CD ladder to hedge between short and long terms.
How is CD interest calculated?▾
Since CDs quote APY (which already accounts for compounding), the formula is simply: A = P × (1 + APY)^t, where P=deposit, APY=annual percentage yield, t=term in years. Total interest = A - P. The APY number already incorporates the compounding frequency used by the bank.
Related Calculators
Example Scenarios — See the Real Numbers