CD Interest Calculator
Calculate interest earned and final value for a Certificate of Deposit (CD) or term deposit.
How to use this tool
- Enter deposit amount, annual rate (apy), cd term and compounding in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your interest earned and the full breakdown beneath it.
CDs offer guaranteed returns for a fixed term. Compare the APY and term length to find the best CD for your savings goals.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Final Value = Principal × (1 + r / n)n × t
Where r = annual rate (decimal), n = compounding periods per year, t = term in years (months ÷ 12).
Interest Earned = Final Value − Principal
Effective APY = (1 + r / n)n − 1
How it works
This calculator applies the standard compound interest formula to a fixed-term Certificate of Deposit. It converts the annual rate and CD term (in months) into a compounded final balance, then reports interest earned and the true annual percentage yield (APY) that accounts for intra-year compounding.
The effective APY is always equal to or greater than the stated annual rate when compounding occurs more than once per year. Results assume the rate and compounding frequency remain constant for the full term, which is standard for fixed-rate CDs.
Worked example
- Principal = $10,000; Annual rate = 0%; Compounding = 12× per year; Term = 12 months (t = 1 year).
- Final Value = 10,000 × (1 + 0 / 12)^(12 × 1) = 10,000 × 1^12 = $10,000.
- Interest Earned = $10,000 − $10,000 = $0.
- Effective APY = (1 + 0 / 12)^12 − 1 = 0%.
Interest earned: $0; Final value: $10,000; Effective APY: 0%.
Common mistakes to avoid
- Entering the term in years when the field expects months, compounding interest for a far shorter period than intended.
- Assuming daily compounding when the CD compounds monthly or quarterly, overstating the final value by a small but real margin.
- Forgetting early-withdrawal penalties -- the calculator shows the full-term result; exiting early typically forfeits 90-180 days of interest.
Key terms
- APY (Annual Percentage Yield)
- The effective annual return after compounding is applied, always stated as a yearly figure regardless of how often interest is compounded.
- Compounding frequency
- How many times per year earned interest is added to the principal — e.g. monthly (12), quarterly (4), or daily (365). More frequent compounding yields slightly more interest.
- Principal
- The original deposit amount placed into the CD before any interest is earned.
- CD term
- The fixed length of time the money is locked in the certificate of deposit, typically ranging from 3 months to 5 years.
- Interest earned
- The dollar amount gained above the original principal over the full CD term.
Frequently asked questions
- What is a CD?
- A Certificate of Deposit (CD) is a savings product offered by banks and credit unions that pays a fixed interest rate for a fixed period. Early withdrawal typically incurs a penalty.
- How is CD interest calculated?
- CD interest compounds based on the stated frequency (monthly, quarterly, etc.). The effective APY shows your true annual return accounting for compounding.