Important Note: The figures provided on this platform are meant for general information purposes only and should not be considered financial advice. We strongly encourage you to check with the specific financial institution for an accurate estimate before applying for any financial product.
You can easily calculate your CD returns in seconds with our CD calculator.
Just input the following details:
Enter the amount of your initial deposit, which is how much you can comfortably invest in a CD without accessing it during the CD’s term.
Enter the CD’s term length in months using whole numbers. For example, if a CD’s term is 1.5 years, you would enter 18 months.
Enter the CD’s APY. To compare different CDs, enter advertised CD rates from various banks.
Then click the red Click Me To Calculate button. You’ll then see the interest you’ll earn and the total value of your CD at maturity.
Alternatively, you can calculate how much interest you’ll earn on paper using the formula:
Interest = P x r x t
Where:
You can then add this amount to your initial deposit to find the total value of your CD at maturity.
The interest earned from a CD depends on its annual percentage yield (APY), compounding frequency and term length. These factors make it important to compare rates and terms when choosing the best CD for you.
To illustrate how these factors affect your earnings, take a look at how APY affects the ending balances of a one-year CD in the table below:
| APY | Interest Earned on $1,000 after One Year | Total Ending Balance |
|---|---|---|
| 1.85% | $18.50 | $1,018.50 |
| 4.50% | $45.00 | $1,045.00 |
| 5.00% | $50.00 | $1,050.00 |
| 5.50% | $55.00 | $1,055.00 |
| 6.00% | $60.00 | $1,060.00 |
To understand your CD interest calculator results, it’s important to know that CD rates are expressed as an annual percentage yield (APY). A CD’s APY refers to how much interest it will earn during a year while accounting for compounding.
By contrast, annual percentage rate (APR) is used for credit cards, personal loans and other debt-related products and refers to how much interest is charged in a year while accounting for the monthly interest of the debt account. The APY more accurately represents a CD’s net gains, which is why CDs use APY instead of APR rates.
The CD’s future value is the total amount you can expect your CD investment to grow by the end of its term, assuming you do not make an early withdrawal, for which you may have to pay a penalty.
CDs pay higher interest rates than even some of the best savings accounts but have less liquidity. Additionally, the APY is fixed for the CD’s entire term, providing you with guaranteed earnings at maturity.
For example, if you deposit $2,000 into a three-year CD with a 5.0% APY, you can expect the following results:
| Deposit | Interest earned at the end of year one | Interest earned at the end of year two | Interest earned at the end of year three | Total interest earned | Future value of CD |
|---|---|---|---|---|---|
| $2,000 | $102 | $108 | $113 | $323 | $2,323 |
As you can see, when the CD reaches maturity, the total amount within the account will be $2,323.
To understand your calculated results for a CD, you must know the following terms:
Before you open a CD, you need to evaluate several factors to determine whether doing so would be a good choice for meeting your financial goals.
A CD’s term length is how long you leave your money in the account without making withdrawals. When you open a CD, you agree to leave your deposit untouched until the end of its term, which is when it matures. CD term lengths vary, so consider a CD’s term before opening an account.
Banks offer varying APYs for CDs. While long-term CDs usually pay the highest APYs, some short-term CDs, such as three-month CDs and six-month CDs, offer competitive rates today. It’s best to choose a CD that pays the most interest for the term you desire.
Some banks and credit unions require minimum deposits to open a CD. Consider whether you can afford to deposit at least the minimum required amount without needing access to the funds for the CD’s term.
Under federal law, banks and credit unions must assess a minimum penalty of seven days’ simple interest when you withdraw funds from a CD early. However, the government doesn’t set a maximum penalty, and many financial institutions assess additional penalties.
In some cases, you might forfeit the interest you earned while your money remains in the account when you withdraw early. Carefully assess whether you can afford to leave your money in a CD for its entire term.
How much a $10,000 CD will earn in five years depends on its APY. For example, depositing $10,000 into a CD that pays 4.5% APY will earn $2,518 in five years for a final balance of $12,518. By contrast, depositing $10,000 in a 6% interest CD will earn $3,489 in five years for a final balance of $13,489.
To calculate interest on a CD, you can use the following formula: Interest = P x r x t
This formula will allow you to see the future value of your CD based on your initial deposit, the interest rate and the CD term.
If you’d rather not calculate this by hand, you can use our CD calculator to receive results in a second.
How much you make on a 5% CD depends on your initial deposit and the CD’s term length. For example, if you deposit $1,000 in a CD with a 5% APY and a term of one year, you’ll earn $50 for a final balance of $1,050. If you deposit $1,000 in a 5% CD with a term of two years, you’ll earn $105 in interest for a final balance of $1,105.
If you put $20,000 in a CD for five years, you’ll need to understand that the account is illiquid, meaning you won’t be able to access your funds for the five-year term. As long as you’re comfortable with that and have an established emergency fund, how much you earn depends on the APY offered by the bank.
For example, if the APY is 1.86%, you’ll earn $1,948 in interest in five years for a future value of $21,948. By contrast, if you deposit $20,000 in a CD with an APY of 6.00%, you’ll earn $6,977 in interest for a future value of $26,977.
Investing money in a CD is worthwhile if you can afford not to touch the funds during the CD’s term, have a conservative risk profile, are nearing retirement or are saving for a specific financial goal.
If you are less risk-averse, are young and have a long time to save, you might be better off investing your money in stocks or bonds because of the potential to earn higher returns.
Many banks allow you to apply online, in person at a bank branch or over the phone. You must provide a valid government-issued ID and a U.S. residential address. Choose whether you want to leave the interest in the CD or receive it periodically. Once you have chosen and submitted your application, you must sign some documents and make your deposit.
Christy Montour is a seasoned finance writer with extensive experience in explaining a wide range of investment types, retirement accounts, and insurance products. With a background in taxation from law school, Christy possesses a deep knowledge of tax strategies and the tax code.
Christy has written thousands of blogs for clients on finance and investment topics. She covers a wide range of subjects, from the Offshore Voluntary Disclosure Program to IRS installment plans, offers-in-compromise, tax liens, levies, and criminal tax issues such as tax evasion and fraud. Christy’s expertise allows her to break down complex financial topics into clear, accessible content for her readers.
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