How the CD Calculator works
A certificate of deposit pays a fixed interest rate in exchange for locking up your money for a set term. This calculator projects the balance at maturity using the standard compound interest formula — the same math a bank uses internally to credit interest to a CD account.
The formula
For a deposit P, an annual interest rate r (as a decimal), a compounding frequency of n times per year, and a term of t years, the value at maturity is:
FV = P × (1 + r/n)n×t
Total interest earned is simply FV − P. The calculator also reports the Annual Percentage Yield (APY), the effective yield after compounding is applied: APY = (1 + r/n)n − 1. The APY is always at or above the stated nominal rate, and the two are identical only when interest compounds annually.
Worked example
Deposit $10,000 in a 12-month CD at a 4.5% annual rate, compounded monthly. Here r/n = 0.045/12 = 0.00375 and n×t = 12. The formula gives a maturity value of about $10,459.44 — roughly $459 in interest — with an APY of about 4.59%, slightly above the 4.5% nominal rate because of monthly compounding.
What moves the result most
- Term length: a longer term lets interest compound over more periods, so the same rate produces proportionally more total interest the longer the CD is held.
- Interest rate: even small differences in the stated rate compound noticeably over multi-year terms — comparing rates across banks for the same term is usually the highest-leverage step.
- Compounding frequency: daily compounding produces a slightly higher APY than monthly or quarterly compounding at the same nominal rate, though the difference is usually a fraction of a percentage point.
What this calculator does not include
This is a maturity-value projection only. It assumes the full deposit stays in the CD for the entire term with no additions or withdrawals. It does not account for early withdrawal penalties (most banks forfeit a portion of interest if you cash out early), account fees, or income tax owed on the interest earned, which is generally taxable in the year it is credited even if the CD has not matured. Check your CD's disclosure statement and consult a tax advisor for those specifics.