How much interest will a CD earn?
Multiply your deposit by the growth from the APY over the term, then subtract the deposit. At 4% APY, $10,000 earns $98.53 in 3 months, $298.52 in 9 months, and $2,166.53 in 5 years. Your bank sets the real APY for each term, so compare terms using each one's own rate.
| Term | $5,000 | $10,000 | $25,000 | $50,000 | $100,000 |
|---|---|---|---|---|---|
| 3 months | $49.27 | $98.53 | $246.34 | $492.67 | $985.34 |
| 6 months | $99.02 | $198.04 | $495.10 | $990.20 | $1,980.39 |
| 9 months | $149.26 | $298.52 | $746.31 | $1,492.62 | $2,985.24 |
| 1 year | $200.00 | $400.00 | $1,000.00 | $2,000.00 | $4,000.00 |
| 18 months | $302.98 | $605.96 | $1,514.90 | $3,029.80 | $6,059.61 |
| 2 years | $408.00 | $816.00 | $2,040.00 | $4,080.00 | $8,160.00 |
| 3 years | $624.32 | $1,248.64 | $3,121.60 | $6,243.20 | $12,486.40 |
| 5 years | $1,083.26 | $2,166.53 | $5,416.32 | $10,832.65 | $21,665.29 |
| APY | Interest | Value at maturity |
|---|---|---|
| 3% | $300.00 | $10,300.00 |
| 3.5% | $350.00 | $10,350.00 |
| 4% | $400.00 | $10,400.00 |
| 4.5% | $450.00 | $10,450.00 |
| 5% | $500.00 | $10,500.00 |
The CD calculator formula, with APY or an interest rate
With an APY, you don't need the compounding schedule, because APY already includes it. A is the value at maturity, P the deposit, and t the term in years.
A = P × (1 + APY)^tFor $10,000 at 4% APY over 18 months, t is 1.5, so A is $10,605.96. If your bank gives an interest rate instead, convert it first. A 4% rate compounded daily is an APY of 4.08%, and compounded monthly it's 4.07%. On $10,000 for a year, that difference is only $0.67. Our APY calculator does this for any schedule.
Under Regulation DD, a bank figures APY from the interest paid and the actual days in the term, using this formula:
APY = 100 × [(1 + interest ÷ principal)^(365 ÷ days in term) − 1]The regulation's own example is a six-month CD of $1,000 that runs 182 days and pays $30.37. That works out to 6.18% APY. This calculator treats a year as 12 equal months, so a real CD can differ by a small amount. Here, $1,000 at that APY for 6 months pays $30.44, which is a few cents more than the bank's 182-day figure.
A CD that pays only at maturity with no compounding has a yield below its stated rate on a long term. A 5% simple rate for 2 years pays $1,000 on $10,000, which is an APY of 4.88%.
What does it cost to break a CD early?
A penalty of 6 months' interest on $10,000 at 4% APY is about $196.42. Cash out at month 6 and you'd have earned $198.04, so you'd keep $10,001.62. Cash out at month 2 and you'd have earned only $65.58, so the same penalty could leave you $130.84 below your deposit.
Regulation DD requires your account disclosure to state whether a penalty applies, how it's calculated, and when it's charged. It can be a dollar amount, a number of days' interest, or a lower rate on the money left in the account. So use your own CD's terms in this calculator. The months below are only examples.
| Cash out at | 3 months’ interest | 6 months’ interest | 12 months’ interest |
|---|---|---|---|
| Month 2 | $9,967.37 | $9,869.16 | $9,672.73 |
| Month 6 | $10,099.83 | $10,001.62 | $9,805.19 |
| Month 12 | $10,301.79 | $10,203.58 | $10,007.15 |
| Month 18 | $10,507.75 | $10,409.54 | $10,213.11 |
The trap is chasing a higher rate. On a 2 yrs CD at 4%, cashing out at month 6 with that penalty only pays if the money then earns more than 5.36% APY for the remaining 1 yr 6 mos. That's the rate to compare against, not 4%. The calculator works it out for your numbers.
The IRS lets you deduct an early withdrawal penalty on Schedule 1 of Form 1040. You still report all the interest shown on your Form 1099-INT, without subtracting the penalty. This tool's break-even rate is before tax.
How does a CD ladder work?
A ladder splits your money across CDs that mature at different times, so part of it comes free without a penalty. The example ladder in this tool puts $20,000 into four CDs and pays $1,264.48 of interest in total, at a dollar-weighted APY of 3.9%.
| CD | Deposit | APY | Term | Interest | Value at maturity |
|---|---|---|---|---|---|
| 6-month | $5,000 | 4.1% | 6 mos | $101.47 | $5,101.47 |
| 1-year | $5,000 | 4% | 1 yr | $200.00 | $5,200.00 |
| 2-year | $5,000 | 3.8% | 2 yrs | $387.22 | $5,387.22 |
| 3-year | $5,000 | 3.7% | 3 yrs | $575.79 | $5,575.79 |
A ladder doesn't always pay more. In this example, shorter CDs pay more, so the longer rungs lock in a lower rate, which helps only if rates fall before the short rungs renew. When longer CDs pay more, the short rungs give up yield in exchange for earlier access. Either way, the result beyond each maturity depends on rates you can't know today, so this tool values each rung only to its own maturity.
Your disclosure must also say whether a CD renews automatically and whether you get a grace period. If you want to use a rung's money, note that date, since a renewal starts a new term.
What do taxes and inflation do to CD interest?
The IRS treats CD interest as taxable income. At a 22% tax rate, $400.00 of interest leaves $312.00, which is a return of 3.12%. If inflation is 2.5%, your real gain in buying power is about 0.6% a year, not 4%.
| Tax rate on interest | Interest after tax | Return after tax | Return after tax and inflation |
|---|---|---|---|
| 12% | $352.00 | 3.52% | 1% |
| 22% | $312.00 | 3.12% | 0.6% |
| 24% | $304.00 | 3.04% | 0.53% |
| 32% | $272.00 | 2.72% | 0.21% |
| 37% | $252.00 | 2.52% | 0.02% |
Timing can catch you out. If a CD runs longer than a year, IRS Publication 550 has you report part of the interest each year as original issue discount, even when the bank pays it all at maturity. So you could owe tax on money you can't yet touch without a penalty. To see how inflation works over longer periods, try our inflation calculator.
When this estimate won’t match your CD
This tool assumes one fixed rate and interest left in the CD. Regulation DD's APY makes the same assumption, and a withdrawal of interest reduces what you earn. Callable CDs, step-up rates, and bonus offers need their own terms. It also uses one flat tax rate, and it can't tell which tax year your interest falls in.
Insurance has a limit. The FDIC insures deposits to at least $250,000 per depositor, per FDIC-insured bank, per ownership category. It counts principal plus accrued interest, and it adds up your CDs, savings, and checking in the same category at the same bank. The calculator warns you when one CD passes that amount. If you're close to the limit, ask the bank or the FDIC how your accounts are covered.
A tax professional can help if you're unsure how to report a long CD. To compare a CD with a savings account you can reach at any time, use our savings calculator. For the bigger idea behind all of this, read how compound growth really works.
Common questions
Should I use APY or the interest rate?
Use APY when you can. Under Regulation DD, it reflects the total interest paid based on the rate and how often interest compounds, so you can compare CDs side by side. If you only have the interest rate, select that option and pick the compounding schedule.
Can I calculate a CD with monthly contributions?
You can, under advanced options. Added deposits land at the end of each month. Not every CD accepts them, so check your account terms before relying on this. If you plan to add money regularly, a savings calculator may be a better fit.
How do I figure out a 6-month or 9-month CD?
Set the term in months. At 4% APY, $10,000 earns $198.04 in 6 months and $298.52 in 9 months. You don't get the whole APY on a short CD, because APY is a yearly figure.
Does the calculator show current CD rates?
No. It has no rate feed, and its rates are examples. Get the real APY from the bank's account disclosure.
What if a CD pays interest out monthly?
If you choose to take interest out, you earn less than the APY, which assumes interest stays on deposit until maturity. If the bank requires payouts, the APY must reflect that, and for some long CDs that don't compound, Regulation DD lets the bank state an APY equal to the interest rate. This tool assumes interest stays in the CD.
What happens when my CD matures?
That depends on your account. Your disclosure must say whether it renews automatically and whether there's a grace period. For tax purposes, the IRS treats a renewal as redeeming the old CD and buying a new one.
Sources
- Regulation DD, Appendix A: Annual Percentage Yield Calculation · Consumer Financial Protection Bureau
- Regulation DD, § 1030.4: Account disclosures · Consumer Financial Protection Bureau
- Deposit insurance FAQs · Federal Deposit Insurance Corporation
- Publication 550: Investment Income and Expenses · Internal Revenue Service
- Topic no. 403: Interest received · Internal Revenue Service