CD calculator

How CD interest is worked out

A certificate of deposit pays a fixed rate for a fixed term. If the interest stays in the CD, it compounds: each period's interest earns interest of its own. The calculator uses the APY, which already includes compounding over a year:

• Balance at maturity = deposit × (1 + APY ÷ 100)^{months ÷ 12}
• Interest earned = balance at maturity − deposit

Put $10,000 in an 18-month CD at 4.00% APY and you earn $605.96. A $25,000 five-year CD at 3.75% APY earns $5,052.50, because the interest from the early years keeps compounding. Banks count the actual days in the term, so their figure can differ from this one by a few cents or dollars. If your CD pays its interest out to another account instead of keeping it, you earn a little less than shown, since nothing compounds.

Interest on $10,000 by term and APY

APY vs APR or interest rate

Under the Truth in Savings Act, Regulation DD requires a bank that advertises a rate of return on a deposit account to state it as an annual percentage yield. APY reflects both the interest rate and how often interest compounds over a 365-day year, which is why it's the fair way to compare CDs. The interest rate, which some banks label APR, leaves compounding out. With daily compounding, a 3.92% rate works out to a 4.00% APY. You can convert either way with the APY calculator.

Early withdrawal penalties

Most CDs charge a penalty if you take money out before the term ends, usually stated as a number of months or days of interest. According to the OCC, federal law sets a minimum penalty (at least seven days' simple interest on money withdrawn in the first six days) and no maximum, so penalties vary a lot from bank to bank.

Take a 12-month, $10,000 CD at 4.00% APY with a penalty of 3 months' interest. That's about $98.06. Close it after 2 months and you've earned only $65.58, so you'd get back $9,967.52, $32.48 less than you put in. The bank reports a penalty in box 2 of Form 1099-INT, and IRS Publication 550 lets you deduct it on Schedule 1 (Form 1040).

Taxes on CD interest

The IRS treats CD interest as taxable interest income, taxed at your ordinary income tax rate. You generally report it in the year it's credited to your account and can be withdrawn without a substantial penalty, even if you leave it in the CD. For a CD with a term longer than one year, IRS Publication 550 says you include part of the total interest in income each year, as original issue discount, even if the bank pays it all at maturity. In the 22% federal bracket, the $605.96 from the 18-month example would mean about $133.31 in federal tax. The 2025 and 2026 federal rates are 10%, 12%, 22%, 24%, 32%, 35% and 37% (checked on IRS.gov in October 2026). State income tax may apply too. This is an estimate, not tax advice.

FDIC and NCUA insurance

CDs at FDIC-insured banks are protected up to $250,000 per depositor, per insured bank, for each account ownership category, such as single, joint or certain retirement accounts. The FDIC says this covers principal and any interest accrued up to the date a bank fails. Credit union share certificates get the same $250,000 coverage from the NCUA's Share Insurance Fund. If your deposit plus interest could pass the limit, you can spread the money across banks or ownership categories; the FDIC's and NCUA's own estimators show what's covered.

CD laddering

A ladder splits your money across CDs that mature at different times, so part of it becomes available regularly and you aren't locked into today's rate for all of it. For example, $20,000 could go into five $4,000 CDs of 1 to 5 years. Each year one matures, and you either use the money or reinvest it in a new 5-year CD. With these made-up rates, purely to show the arithmetic:

Use the comparison above to try your own rungs. To see how your savings fit into the bigger picture, add them up with the net worth calculator, or measure any other investment with the ROI calculator. This page explains how the numbers work; it isn't financial advice.