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CD Calculator

Dec 05, 2023

How to calculate your CD earnings

Because CDs generally have a fixed annual percentage yield (APY) you can get a reasonably accurate calculation of how much you’ll earn when your CD matures. However, an early withdrawal penalty can eat into your earnings if you withdraw your funds prematurely before the CD’s term matures.

Follow the steps below to use the Bankrate CD calculator to see how much interest you’ll earn over time:

  1. Determine how much money you’d like to put in a CD. CDs generally have early withdrawal penalties if you withdraw money before the term ends. So choose your term carefully.
  2. Deposit the amount you wish to sock away as your initial deposit. 
  3. Plug in the number of months – or years – of the CD’s term into the calculator.
  4. Finally, add the CD’s APY. Because APY includes the effects of compounding, you don’t need to worry about putting the frequency of compounding.

How much interest will I earn on a CD?

The amount of interest you can earn on a CD depends on its APY and its term.

CD terms to know

Initial deposit
The starting balance for your CD.
Term length
The amount of time you need to hold your CD. You’ll generally earn a fixed APY during that term.
Interest rate
The base rate that your deposit earns money.
Annual percentage yield (APY)*
The percentage that indicates how much interest a bank account earns in one year.
Interest you earn is added to your balance. And that interest earns interest.
Early withdrawal penalty
The penalty you’ll incur if you withdraw from your CD before the term ends.

*Formula: APY = 100 [ ( 1 + Interest / Principal ) ( 365 / Days in term ) − 1 ]

What is a good APY on a CD?

In this current high interest rate environment, you should be able to get a CD APY that’s at least twice that of the national average. For instance, the one-year CD national average is 1.77 percent APY. Currently, the highest-yielding rate among one-year CDs that are widely available at banks and credit unions is 5.36% APY .

How are CDs different from savings accounts and money market accounts?

A CD generally pays interest at a fixed rate of return and a fixed period of time, or term, that you’re required to keep your money in. Withdrawals before the term ends will generally result in an early withdrawal penalty. 

High-yield savings and money market accounts aren’t timed accounts, and generally you can withdraw your money any time. But these deposit accounts might have restrictions on the number of certain withdrawals or transfers you can make from a savings deposit account during your statement cycle. A bank might also charge a fee for excessive withdrawals or transfers, and it could close your account for making excessive withdrawals/transfers from a savings deposit account.