Calculate returns and interest on Certificates of Deposit (CDs). Support compound interest calculations to help you plan investment returns and financial goals.
Calculate
Results
$10,459.40
Maturity Value
$459.40
Total Interest
4.59%
Effective Yield
Initial Deposit:$10,000.00
Term Length:1 Years
Interest Rate (APY):4.5% APY
Compounding Frequency:Monthly
Tips
• Longer terms typically offer higher rates
• Higher compounding frequency means more returns
• Consider inflation's impact on real purchasing power
• Compare CD rates from different banks
How to Use
Enter Initial Deposit: Input the amount you plan to deposit in the CD.
Select Term Length: Choose the CD term, which can be in months or years.
Enter Interest Rate (APY): Input the Annual Percentage Yield offered by the bank.
Choose Compounding Frequency: Select how often interest compounds (monthly, quarterly, annually, etc.).
View Results: The system will automatically calculate and display maturity value, interest income, and other information.
Frequently Asked Questions
Q
What's the difference between CDs and regular savings accounts?
CDs typically offer higher interest rates but require locking up funds for a fixed period. Regular savings accounts allow withdrawals anytime but offer lower rates.
Q
What happens if I withdraw early?
Early withdrawal usually incurs penalties, which vary by bank and CD term. Consider your liquidity needs when choosing a CD term.
Q
What's the difference between APY and interest rate?
APY (Annual Percentage Yield) includes the effect of compounding and represents the actual annual return. Nominal interest rate doesn't include compounding effects.
Q
What's the minimum deposit for a CD?
Minimum deposits vary by bank, typically ranging from $500 to $10,000. Some banks may have lower or higher requirements.
Q
Do CDs automatically renew at maturity?
Most CDs automatically renew at maturity unless you take action during the grace period. Contact your bank before maturity to understand renewal policies.
Features
What is a Certificate of Deposit (CD)?
A Certificate of Deposit (CD) is a fixed-term savings account where you deposit money with a bank or credit union for a specific period in exchange for a higher interest rate than regular savings accounts. CDs typically offer a fixed Annual Percentage Yield (APY), making it easy to calculate exactly how much you'll earn when your CD matures.
How CDs Work
CDs work simply: you deposit a sum of money, and the bank promises to pay a fixed interest rate for a specified term. Terms can range from a few months to several years, with longer terms typically offering higher rates. Early withdrawal before maturity usually incurs penalties.
Benefits of CDs
Principal Protection: CDs are low-risk investments with guaranteed principal and interest
Fixed Returns: Interest rates remain constant throughout the term, unaffected by market fluctuations
FDIC Insurance: In the US, FDIC provides insurance up to $250,000 per depositor
Forced Savings: Fixed terms help develop saving habits