CD Calculator
How It Works
CDs compound daily in most cases. This calculator uses the standard compound interest formula with daily compounding:
CD Term Comparison
$10,000 deposit at 5.00% APY:
Tips
- Compare CDs using APY, not the stated interest rate. APY already accounts for compounding frequency.
- Online banks and credit unions typically offer significantly higher CD rates than traditional brick-and-mortar banks.
- Before locking in a long-term CD, check the early withdrawal penalty. A 12-month interest penalty on a 5-year CD can erase your gains if you need the funds early.
Frequently Asked Questions
What is a certificate of deposit (CD)?
A CD is a savings product offered by banks and credit unions where you deposit a fixed amount for a fixed term (e.g., 6 months, 1 year, 5 years) in exchange for a guaranteed interest rate. CDs typically pay higher rates than regular savings accounts because you agree not to withdraw the money early.
Are CDs FDIC insured?
Yes. CDs at FDIC-insured banks are insured up to $250,000 per depositor, per institution, per ownership category. Credit union CDs are similarly insured by the NCUA up to $250,000.
What happens if I withdraw from a CD early?
Most CDs charge an early withdrawal penalty — typically 3 to 12 months of interest, depending on the CD term. Some "no-penalty" CDs allow early withdrawal without fees, but they usually pay lower rates than traditional CDs.
What is a CD ladder?
A CD ladder splits your money across multiple CDs with staggered maturity dates (e.g., 1-year, 2-year, 3-year). As each CD matures, you reinvest at the current rate. This gives you regular access to funds while capturing higher rates on longer-term CDs.