CD Calculator

A Certificate of Deposit is often called a 'CD'. These are financial investment instruments offered by banks, allowing you to deposit money for a specified term, and earn an interest rate for that period. The terms usually range from 3 months to 6 or 7 years, but can be a long as 15 years.

There are three main benefits of CDs.

  • First, there is almost no risk to these investments because they are not tied to the stock market. Since the term and interest rate is pre-established, you know exactly how much money you will receive.
  • The second benefit is that they are insured against loss by the FDIC (but the bank holding the CD must belong to the FDIC). This insurance virtually guarantees that you will not lose any money on this investment.
  • Third, you hold a free option to get the highest yield available. To exercise this option, you have to break the CD term, i.e. perform an early withdraw of all funds and reinvest at the new higher rate. Even though you will pay a penalty, you will earn more interest if the new rate is high enough.

Because of these benefits, CD's are very good instruments for conservative investors. They can be used for just saving, children savings, college savings, and retirement accounts.


The calculator below allows you to determine how much money you will earn on a CD. Simply enter the amount invested, the deposit start date, the maturity date, and the interest rate. Then press the compute button. It's that easy. For results, you will see two tables. One shows the amount of interest earned for various terms. The second lists the breakeven yields you must earn if you exercise the early withdrawl option and you pay the penality.

Today:  
Amt Deposited:  
CD Rate:  
Start:  
Term:    
Maturity Date:  
Assumed Roll:  
date Today Maturity 1 Month 1 Year
Value 0.00 0.00 0.00 0.00
Interest 0.00 0.00 0.00 0.00
Early Withdrawl Penalties & Breakeven Yields
Breakeven 3 Month 6 Month 9 Month 12 Month
Days 91 183 273 365
Penalty 0.00 0.00 0.00 0.00
Value 0.00 0.00 0.00 0.00
1 Year 0.00 0.00 0.00 0.00
2 Year 0.00 0.00 0.00 0.00
3 Year 0.00 0.00 0.00 0.00
4 Year 0.00 0.00 0.00 0.00
5 Year 0.00 0.00 0.00 0.00
data table
graph
APY is the abbreviation for "Annual Percentage Yield". This is the total interest you will earn yearly on your CD and will be annually compounded. For example, assume that you invest $1,000 in a two year CD with an APY of 4.00%. A the end end of the first year, you will have $1,040 ($1,000 plus $40 interest). During the second year, you will then earn 4% interest on $1,040. Thus, you will receive $41.60 interest and your CD will mature with a total value of $1,081.60 because the APY is compounded annually.
Most CDs accrue interest daily and it is compounded daily. The actual interest rate paid is slightly less than the stated APY because it is a compound yield. To determine the daily rate of your CD, use the formula APY = ( 1.0 + rate/ndays )^ndays and solve for the rate variable. Note that the variable ndays is either 365 or 366 depending on the number of days in the year, and it may vary from year to year.
Each bank pays interest on their CDs differently. Some pay the first day of the month. Others pay on the day of the month the CD matures. Yet others post the interest quarterly. Because there are no rules, you need to ask the bank directly for understand their policy. This is extremely important to know if you are planning to withdraw any funds because you may lose the interest not credited.
Yes, most banks allow you to withdraw the interest you have earned without any penalty. Most people just let their CD value to grow during the full term. However, some people (particularily those who are retired) take regular withdraws monthly, quarterly, semi-annually, or annually. Before withdrawing interest, have your bank to explain their policy fully.
Once you open a CD, you deposit a certain amount of money. This is called the Principal. You cannot withdraw any of this money during the term of the CD without paying a penalty. There are a few exceptions however. For example, if the owner of the CD dies, the beneficiaries may be allowed to withdraw the funds. Similarily, if the CD is part of an IRA, and you are required to take an RMD, that portion of the principal may not be subject to a penalty. Ask your bank to about their rules.
In most cases, an early withdrawl penalty is charged whenever your CD value is less than your initial principal deposit. The penalty may be equal to 1, 3, 6, 9, 12, 18 months interest depending on the term of your CD. Each bank has different rules. Some specify days and/or months of interest. There may be minimum fees or additional fees as well. Prior to opening a CD, you should know what the bank will charge you. We recommend that you avoid any bank that charges more than 12 months interest. We typically avoid those charging 12 months as well.
If your CD is inside a retirement account and you are 72 or older (previously 70 1/2), then you must withdraw a certain percentage of its value every year. This is called an RMD, short for Required Minimum Distribution. If your RMD exceeds the accumulated interest in your CD, then a portion of your principal must be withdrawn. While this is technically an Early Withdrawl, you will not be subject to a penalty. Some banks forego the penalty on the principal amount only, but others allow you to break the term of the IRA entirely. This is very important because you have free option to reinvest your full amount in to a higher yielding CD. If your bank allows you to do this, then you should always invest in the highest yielding CD offered.
Be careful with this one and always know when your CD matures. Why? Because your CD will automatically renew at the same term. If interest rates are higher in another bank or at another term, then you will want to move your money in order to obtain the highest yield possible. Typically, you will have a 7 to 10 days from maturity to withdraw the funds penalty free (grace period). While this changing CD terms or banks requires a bit of work for you, the time required will relatively short compared to the amount of interest income you can gain.
FDIC Insurance is your friend. Only invest in banks that are members and display the FDIC seal. It is a federal insurance that protects depositors from loss of principal and interest but has limits. Individual accounts up to $250,000 and joint accounts up to $500,000 are protected. When opening a CD, make sure that you stay within these limits. It may take a little while for you to get your money back, but you will get everything. This coverage does not cost you anything and is extremely important.
Secondary market CDs are found at investment broker sites. These are similar to bank CDs as they have a stated APY, but they can be bought or sold without regard to early withdrawl penalties. Unlike a bank CD, the secondary market CD has an associated price that fluctuates depending on the stated yield. This means you can lose money if interest rates rise but you can make money if interest rates fall. Most often, the CD will be FDIC insured. However, when it matures, the principal and interest will be deposited into your brokerage account and will not be insured. In reality, these instruments act more like zero coupon bonds.