A certificate of deposit (CD) is one of the simplest ways to earn more interest than a standard savings account: you agree to leave your money untouched for a fixed term — anywhere from 3 months to 5 years — and in return the bank guarantees a fixed rate for the entire period. This free CD calculator shows exactly what that guarantee is worth to you at maturity.
The headline number banks advertise is the APY (annual percentage yield), which already accounts for compounding — so comparing APYs is the apples-to-apples way to shop for CDs. Still, the term and compounding schedule change the final payout: a $10,000 deposit at 4.50% APY compounded daily earns slightly more than the same rate compounded annually, and stretching from 12 to 60 months multiplies the interest several times over.
The trade-off is liquidity: withdraw early and most banks charge 3–6 months of interest as a penalty. CDs work best for money you will not need before maturity.
How to use the CD Calculator
- Enter your initial deposit in dollars.
- Add the APY from the bank's quote, e.g. 4.50 — use the APY, not the nominal rate.
- Choose the term from 3 months up to 5 years.
- Pick the compounding frequency — daily is most common for US banks.
- Click Calculate growth to see the maturity value, interest earned, and year-by-year balances.
Tips for getting more from a CD
- Online banks often pay 5–10× what branch banks offer — always compare APYs.
- Ladder your CDs (1–5 year terms) so a portion matures every year at current rates.
- Opening when rates peak locks the return even if rates fall later.
CD vs. savings account: which is better?
A savings account keeps cash fully liquid, but the bank can change the rate anytime. A CD locks your rate in for the whole term, guaranteeing the return if you hold to maturity. Keep 1–3 months of expenses in savings and put the rest of your medium-term savings in a CD.
Frequently asked questions
What is a certificate of deposit (CD)?
A CD is a savings product where you lock money with a bank for a fixed term (3 months to 5 years) in exchange for a guaranteed interest rate. Unlike a regular savings account, you generally cannot withdraw early without a penalty, but the rate is fixed for the whole term.
How is CD interest calculated?
With the compound interest formula A = P(1 + r/n)^(n·t), where P is the deposit, r the annual rate, n the periods per year, and t the years. Daily compounding earns slightly more than annual compounding.
What happens if I withdraw from a CD early?
Most banks charge an early withdrawal penalty, commonly 3–6 months of interest depending on the term length. This calculator does not subtract penalties — check your bank's terms.
Are CDs safe? Is my money insured?
CDs from FDIC-member banks (or NCUA credit unions) are federally insured up to $250,000 per depositor, per institution.