Skip to content
CalculatorDash
Menu

CD Calculator

Updated · By the CalculatorDash editorial team · How we check our maths

Quick answer

Because APY already includes compounding, a CD's value is deposit × (1 + APY)^(months ÷ 12). $10,000 in a 12-month CD at 4.5% APY grows to $10,450; an 18-month CD at the same APY grows to about $10,683.

CD earnings

$
%
%

Value at maturity

$10,450.00

Interest earned
$450.00
Real return (after inflation)
1.95%

Per year.

Interest is taxable in most countries. Early withdrawal usually costs several months of interest.

How this calculator works

A certificate of deposit locks your money away for a fixed term in exchange for a guaranteed rate. Banks quote the annual percentage yield (APY), which already includes the effect of compounding, so you don't need to know how often interest is credited to work out the value at maturity.

CDs suit money you won't need until a known date. Building a CD ladder, several CDs maturing at different times, keeps some money accessible while still earning higher fixed rates. In the US, deposits at FDIC-insured banks are protected up to the insurance limit.

The formula

Value at maturity
deposit × (1 + APY)^(months ÷ 12)
Real return
(1 + APY) ÷ (1 + inflation) − 1

Worked example

$10,000 at 4.5% APY for 12 months is worth $10,450 at maturity. Over 18 months it's $10,000 × 1.045^1.5 = $10,682.54. With 2.5% inflation, the real return is about 1.95% a year.

Tips

  1. 01Compare APYs, not interest rates; APY includes compounding.
  2. 02Check the early-withdrawal penalty before you commit; it's often three to twelve months of interest.
  3. 03No-penalty CDs pay a little less but let you withdraw early if rates rise.

Frequently asked questions

How is CD interest calculated?

Using the APY: value = deposit × (1 + APY)^(years). For a term shorter or longer than a year, use months ÷ 12 as the years.

What's the difference between APY and APR?

APR is the simple annual rate; APY includes compounding within the year, so it's the true annual return.

Are CDs a good investment?

They're safe and predictable, which suits short-term goals. Over long periods, diversified investments have usually earned more, with more risk.

Is CD interest taxable?

In the US, CD interest is taxed as ordinary income in the year it's earned, even if you don't withdraw it.