CD Calculator
Calculate earnings on any Certificate of Deposit with full APY, compounding frequency, tax on interest, and early withdrawal penalty analysis. Compare all standard CD terms from 3 months to 5 years side by side to find the best option for your savings. Includes FDIC insurance limits and after-tax return comparison.
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How It Works
The CD grows using the compound interest formula. Since APY already accounts for compounding, use A = P(1+APY)^t where t is the term in years.
A = P × (1 + APY)^t$25,000 at 5.0% APY for 1yr = $26,250CDs almost always quote APY. The APR is lower than APY for the same product when compounding occurs more than annually. The calculator converts APY to APR to show the nominal rate.
APR = n × ((1+APY)^(1/n) - 1)5.0% APY monthly: APR = 12×((1.05)^(1/12)-1) = 4.888%CD interest is taxable as ordinary income. Multiply total interest by your tax rate to find the tax liability. Subtract from total interest for the after-tax amount. Use IRA CDs to defer taxes.
After-tax interest = Total Interest × (1 - Tax Rate)$1,250 interest at 22% tax = $975 kept after taxIf you need to access the CD early, the penalty is typically a set number of months of interest. For young CDs, the penalty can exceed earned interest, reducing the principal returned.
Penalty = Principal × APY × Penalty Months / 12$25K at 5%, penalty 6mo: $25K×5%×0.5 = $625 penaltyThe comparison table shows total interest and maturity value across all standard CD terms at the same rate. This helps visualize the earnings increase from committing to longer terms.
Each term: A = P × (1+APY)^(term/12)$25K at 5%: 6mo=$619, 1yr=$1,250, 2yr=$2,563, 5yr=$6,907A CD ladder divides the deposit into equal portions across different terms. As each CD matures, reinvest at the longest term. This provides access to part of the funds regularly while earning higher long-term rates on most of the deposit.
Each rung: P/5 × (1+APY)^(term/12)$100K ladder: $20K each in 1,2,3,4,5yr CDsQuick Reference
Common examples — verify instantly above.
$25K at 5%, 1yr
Maturity value
$26,250
$25K at 5%, 1yr
Interest earned
$1,250
After-tax interest
$1,250 at 22% bracket
$975 kept
Early penalty
$25K at 5%, 6-month penalty
$625 penalty
$50K at 5%, 3yr
Total earnings
$7,882
3-month CD
$25K at 4.5% APY
$280 interest
5-year CD
$25K at 5% APY
$6,907 total interest
FDIC limit
Per depositor, per bank
$250,000 insured
Tips & Shortcuts
Shop for CDs at online banks and credit unions. They often offer 0.5% to 1.5% higher APY than traditional brick-and-mortar banks for the same terms.
Consider a CD ladder if you are uncertain about your timing needs. Splitting $100,000 into five $20,000 CDs with 1 to 5 year terms provides annual access while earning long-term rates.
Check if no-penalty CDs are available from your bank. Some online banks offer CDs that can be broken without penalty after the first week — a safer alternative to standard CDs.
For large deposits (over $250,000), use the CD IOwne Ownership calculator at FDIC.gov to confirm your total insurance coverage across institutions.
Hold CDs in an IRA for tax-deferred interest. You pay no tax on the interest annually — it grows tax-deferred until withdrawal, significantly improving long-term returns in higher tax brackets.
Watch for CD specials and promotional rates. Banks often offer above-market rates on odd terms (7-month, 13-month) to attract new deposits. These promotional CDs can significantly outperform standard terms.
Common Mistakes to Avoid
Comparing CD rates using APR instead of APY
Always compare CDs using APY. A CD advertised at 4.95% APY is comparable to another at 4.95% APY regardless of compounding frequency. APR varies by compounding and is not a fair comparison metric.
Not accounting for taxes when comparing CD returns to other investments
CD interest is fully taxable at ordinary income rates. A 5% CD in the 22% bracket returns 3.9% after tax. Compare after-tax CD returns against tax-advantaged alternatives like I-bonds or municipal bonds.
Ignoring early withdrawal penalties when planning liquidity needs
CDs are not liquid. A 3-month penalty can cost $600 on a $25,000 CD at 5%. If you might need the funds, use a high-yield savings account or no-penalty CD instead.
Automatically rolling over CDs at maturity without checking current rates
Banks often roll CDs over at prevailing rates when they mature, which may be lower than rates available at other institutions. Mark your maturity date and shop rates during the grace period (typically 7 to 10 days).
Exceeding FDIC insurance limits at a single institution
FDIC insures $250,000 per depositor per institution. If you have more, split across multiple institutions or use joint accounts (each joint account holder gets $250,000 coverage).
Choosing the longest term without comparing to bond or treasury yields
For 5-year terms, compare CD APY to 5-year US Treasury yields. Treasuries are also FDIC-equivalent safe and may offer better rates, plus they are state-tax-exempt.
Frequently Asked Questions
A CD is a deposit account offered by banks and credit unions with a fixed interest rate and fixed maturity date. You agree to leave the money deposited for the term in exchange for a higher interest rate than a savings account. CDs are FDIC-insured up to $250,000 per depositor, per institution.
CD rates are almost always quoted as APY (Annual Percentage Yield), which includes the effect of compounding. APR is the nominal rate before compounding. At the same rate, APY is always equal to or greater than APR. When comparing CDs, always use APY for an apples-to-apples comparison.
CDs charge a penalty if you withdraw before the maturity date. Typical penalties are 3 months of interest for terms under 1 year, 6 months for 1-3 year terms, and 12 months for longer terms. Some penalties can eat into principal if the CD is young enough. Online banks sometimes offer no-penalty CDs.
Longer terms typically pay higher rates. If you are confident you will not need the funds during the term and rates are currently high, a longer term locks in that rate. If rates are rising, shorter terms let you reinvest sooner at higher rates. A CD ladder strategy uses multiple terms to balance rate and flexibility.
A CD ladder splits your investment across multiple CD maturities — for example, 3 months, 6 months, 1 year, 2 years, and 3 years. When each CD matures, you reinvest at the longest term. This provides regular access to funds while maintaining exposure to higher long-term rates.
Yes. CD interest is taxable as ordinary income in the US in the year it is credited, even if you do not withdraw it. Banks issue Form 1099-INT for interest over $10. CDs held in IRAs or other tax-advantaged accounts defer taxes until withdrawal.
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