You enter your initial deposit, the annual interest rate, a term from 3 months to 5 years, and a compounding frequency (daily, monthly, quarterly, or annually). The tool applies the compound interest formula A = P(1 + r/n)^(nt) to compute the maturity value. It then derives APY so you can compare CDs regardless of how often interest compounds. Early withdrawal penalties and taxes are not factored in.
For most CD rates, the difference between daily and monthly compounding is small — often just a few cents per thousand dollars. The gap grows with higher rates and longer terms, but APY already bakes in compounding, so compare APY across offers.
Most banks charge an early withdrawal penalty, typically ranging from 3 to 12 months of interest depending on the term. Some brokered CDs can be sold on a secondary market instead, but you may receive less than face value if rates have risen.
Yes. Interest earned on CDs is taxed as ordinary income in the year it is credited, even if you do not withdraw it. Your bank will issue a 1099-INT for any interest over $10.
CDs held at FDIC-insured banks are covered up to $250,000 per depositor, per institution. Credit union CDs (called share certificates) are similarly insured by the NCUA up to $250,000.
APR (Annual Percentage Rate) is the nominal rate before compounding. APY (Annual Percentage Yield) reflects the actual return after compounding. For CDs, APY is the more useful number because it tells you what you will actually earn.
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.