CD Rate Calculator
Calculate how much a certificate of deposit (CD) will earn at maturity, including total interest and effective annual yield.
CD Details
Maturity Value
$10,459.40
Current Average Top-Yield CD Rates
Frequently Asked Questions About CD Rates
How do I calculate CD interest?
Enter your deposit amount (principal), the APY the bank quotes, your term length, and the compounding frequency in the calculator above. The tool applies the standard compound interest formula, A = P(1 + r/n)^(n×t), where P is your principal, r is the annual rate, n is the number of compounding periods per year, and t is the term in years, to show your maturity value and total interest earned.
What is the difference between APY and interest rate on a CD?
The interest rate is the nominal annual rate before compounding is applied. APY (Annual Percentage Yield) already factors in how often interest compounds, so it reflects what you actually earn in a year. Banks are required to advertise APY for CDs, which is why this calculator asks for APY directly rather than a separate nominal rate.
Does compounding frequency actually matter for CDs?
Yes, though the effect is smaller than the difference between two APY offers. For the same quoted APY, daily compounding earns slightly more than monthly, which earns slightly more than quarterly or annual compounding, because interest is credited and starts earning its own interest sooner. On a $10,000 CD the difference between daily and annual compounding is typically just a few dollars per year, so the APY itself matters far more than compounding frequency when comparing CDs.
What happens if I withdraw from a CD early?
Most CDs charge an early withdrawal penalty, commonly a forfeiture of a set number of months of interest (for example, 3 months of interest on a 1-year CD, or 6-12 months on longer terms). This calculator shows the interest you would earn if you hold the CD to maturity; it does not model early withdrawal penalties, since those vary significantly by bank and CD term.
Is CD interest taxable?
Yes. Interest earned on a CD held outside a tax-advantaged account (like an IRA) is taxable as ordinary income in the year it is earned or credited, even if you do not withdraw it, and the bank will issue a Form 1099-INT once interest for the year exceeds $10. This calculator shows pre-tax interest; consult a tax professional for how it affects your specific return.
How much will a $10,000 CD earn in a year?
It depends entirely on the APY offered. At today's average top-yield 1-year CD rate of around 4.5% APY compounded monthly, a $10,000 CD earns roughly $459 in interest over one year. Enter your own deposit amount and the APY you were quoted in the calculator above for an exact figure.
Are CD rates tied to the Federal Reserve rate?
CD rates are not set directly by the Fed, but banks typically move CD APYs up or down in the same direction as the federal funds rate over time, since it affects banks' own cost of funds and what they are willing to pay to attract deposits. CD rates react more slowly and less precisely than fed-funds-linked products like savings accounts, and shorter-term CDs tend to track short-term rate expectations more closely than long-term CDs. See our current Fed rate and next FOMC meeting pages to track the rate environment.
How It's Calculated
A CD's maturity value is calculated with the standard compound interest formula, applied at whatever frequency the bank compounds interest (daily, monthly, quarterly, or annually):
A = P · (1 + r/n)n·t
Where each term means:
- A — the maturity value: your deposit plus all interest earned by the end of the term.
- P — the principal: the amount you deposit into the CD.
- r — the annual interest rate (APY) as a decimal. A 4.5% APY becomes 0.045.
- n — the number of times interest compounds per year (365 for daily, 12 for monthly, 4 for quarterly, 1 for annually).
- t — the term length in years. An 18-month CD is t = 1.5.
A worked example
Suppose you deposit $10,000 into a 1-year CD at 5% APY, compounded monthly:
- P = 10,000
- r = 5% = 0.05
- n = 12 (monthly compounding)
- t = 1 year
Plugging these into the formula gives A = 10,000 · (1 + 0.05/12)12 ≈ $10,511.62. That is $511.62 in total interest earned over the year, an effective annual yield slightly above the nominal 5% rate because of the monthly compounding.
Note: this calculation assumes the CD is held to maturity. It does not include early withdrawal penalties or taxes on interest earned. Actual APYs vary by bank, term, and deposit amount.
Authoritative sources: Federal Reserve · FOMC · FRED Economic Data · U.S. Treasury