CD Calculator
Calculate potential earnings from your Certificate of Deposit investment
Investment Details
Results
Enter your investment details and click Calculate to see results
What is a CD
A certificate of deposit (CD) is a financial product offered by banks and credit unions that allows individuals to deposit money for a fixed term in exchange for a guaranteed interest rate.
When you invest in a CD, you agree to leave your funds with the bank for a specified period, which can range from a few months to several years. In return, the bank pays you a fixed interest rate, typically higher than that of regular savings accounts.
How CD Rates are Determined
CD rates are influenced by various factors:
- Federal Reserve Policies: The Federal Reserve's decisions on interest rates directly impact what banks offer for CDs. Generally, when the Fed raises rates, CD rates also increase.
- Market Competition: Banks may adjust their CD rates based on competition and their need for deposits. A bank seeking more deposits may offer higher rates to attract customers.
How to Use the CD Calculator
1. Enter Your Investment Details
- Input your initial deposit amount (e.g., $10,000)
- Set the annual interest rate (e.g., 5%)
- Specify the term length:
- Years (0 or more)
- Months (0-11)
- Choose how often interest compounds (annually, monthly, etc.)
2. Calculate Returns
- Click the "Calculate" button
- View your results instantly:
- Final balance
- Total interest earned
- Interactive growth chart
3. Review Detailed Breakdown
- Examine the year-by-year breakdown table
- See how your money grows over time
- Use the "Reset" button to start over with new values
That's it! The calculator will show you exactly how your CD investment will grow over your chosen term.
CD terms
Here are some CD terms you need to know:
- Initial deposit: The amount of money you initially invest in the CD.
- Term length: The duration for which you agree to keep your money invested in the CD. You'll generally earn a fixed interest rate during this period.
- Interest rate: The base percentage used to calculate the interest earned on your deposit.
- Annual percentage yield (APY)*: The percentage that represents the total interest you will earn on your account in one year, considering the effects of compounding.
- Compounding: The process where the interest earned on your deposit is added to your account balance. This added interest then starts earning interest itself, resulting in faster growth of your investment.
- Early withdrawal penalty: The fee charged if you withdraw your money from the CD before the end of the agreed-upon investment period.
Formula: APY = 100 [ ( 1 + Interest / Principal ) ( 365 / Days in term ) − 1 ]