CD Calculator [2026]
Calculate your certificate of deposit interest income, maturity balance, compounding frequency impact, and early withdrawal penalty deductions.
Certificate of Deposit (CD) Interest & APY Formulas
A Certificate of Deposit (CD) is an FDIC-insured time deposit offering a guaranteed fixed interest return in exchange for locking up capital for a predetermined duration. Banks express returns via APY (Annual Percentage Yield), which incorporates interest compounding.
P = Deposit Principal • APY = Yield as decimal • t = Term in years (e.g. 6 mo = 0.5)
Daily compounding earns slightly more than monthly or annual compounding because accrued interest begins earning interest on day two.
Withdrawing funds before maturity forfeits a set number of months of interest (typically 90 days for terms ≤12 mo; 180 days for longer terms).
Deposit ParametersGuaranteed APY
Value of CD after 12 months at 4.85% APY
CD Interest Earnings Across Standard Terms
Comparing interest growth on a $10,000 deposit at 4.85% APY:
| CD Term | Initial Deposit | Interest Earned | Maturity Ending Balance |
|---|---|---|---|
| 6 Months (0.5 Years) | $10,000 | +$239.63 | $10,239.63 |
| 12 Months (1 Year) | $10,000 | +$485 | $10,485 |
| 24 Months (2 Years) | $10,000 | +$993.52 | $10,993.52 |
| 36 Months (3 Years) | $10,000 | +$1,526.71 | $11,526.71 |
| 60 Months (5 Years) | $10,000 | +$2,671.91 | $12,671.91 |
Frequently Asked Questions About CDs
How do you calculate interest on a CD?↓
CD interest is calculated using the compound interest formula: A = P × (1 + r/n)^(n*t), where A is maturity balance, P is initial deposit, r is annual interest rate, n is compounding frequency (e.g. 365 daily or 12 monthly), and t is term in years. With APY, the formula simplifies to A = P × (1 + APY)^t.
How much interest does a $10,000 CD make in a year?↓
At a 5.00% APY, a $10,000 1-year CD earns exactly $500.00 in interest, resulting in an ending maturity balance of $10,500.00. At 4.50% APY, it earns $450.00 in interest.
What is the penalty for withdrawing money from a CD early?↓
Early withdrawal penalties depend on the CD term and the bank: CDs of 12 months or less typically penalize 90 days (3 months) of simple interest; CDs longer than 12 months typically penalize 180 days (6 months) of interest. Some long-term 5-year CDs charge up to 365 days of interest.
What is the difference between APR and APY on a CD?↓
APR (Annual Percentage Rate) is the simple nominal interest rate without taking compounding into account. APY (Annual Percentage Yield) reflects the true annual return including the effect of interest compounding (daily or monthly). APY is always slightly higher than APR.
Authored by Arham Bilal
Formulas calibrated against Truth in Savings Act (TISA) Regulation DD APY calculation standards and FDIC deposit insurance guidelines.
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