A CD trades liquidity for a fixed, typically higher guaranteed rate than an ordinary savings account. This works out the balance at maturity from the deposit, rate and compounding frequency.
How it works
Compound growth
balance = principal × (1 + r/n)ⁿᵗ
The same compound-interest formula this site’s own compound interest calculator documents and tests, applied to a fixed CD term.
APY already accounts for compounding — don’t enter it twice
A CD advertised as “5.00% APY” already reflects whatever compounding frequency the bank uses. This calculator’s rate field expects the nominal annual rate; if only APY is published, using the annual (once-a-year) compounding option with that APY figure gives the closest match, rather than entering the APY as if it were the nominal rate under monthly compounding, which would double-count the compounding effect.
Early withdrawal usually costs a real penalty
This calculator computes the number for holding to full term. Breaking a CD early commonly forfeits some months of interest as a penalty, on top of losing the compounding shown here — if there’s a real chance the money is needed before the term ends, the effective return could be meaningfully lower than the figure shown.
How to use this calculator
- Enter the deposit amount and the nominal annual rate.
- Choose the compounding frequency your specific CD uses.
- Enter the term.
Frequently asked questions
Why does compounding frequency matter if the nominal rate is the same?
More frequent compounding means interest starts earning its own interest sooner within each year, which raises the effective annual yield slightly above the nominal rate — the effective APY figure this calculator shows makes that gap visible.
What’s the difference between APY and the nominal rate?
The nominal rate is the stated annual rate before accounting for compounding; APY (annual percentage yield) already includes the effect of compounding within the year, so APY is always equal to or slightly higher than the nominal rate.
Is a CD safer than investing in the stock market?
CDs from an insured institution carry deposit insurance up to stated limits and a fixed, guaranteed rate — a genuinely different risk profile from market-based investing, which carries the potential for both higher returns and real losses.
Can I add more money to a CD after opening it?
Typically not — most standard CDs are a single lump-sum deposit for a fixed term, unlike a savings account you can add to at any time. Check your specific product’s terms.
What happens if I need the money before the CD matures?
Most CDs charge an early withdrawal penalty, commonly some months of interest — check your specific CD’s terms, since this varies by bank and term length, and this calculator doesn’t model it.
