CD Calculator
What a certificate of deposit will be worth at maturity, and how much interest it earns along the way.
Your CD
Assumes monthly compounding — check your CD's actual compounding schedule for precise figures.
Maturity Value
$10,940
At the end of your CD's term
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Last updated: August 6, 2026 · Reviewed by the DoCalc team
What Is a CD?
A certificate of deposit (CD) is a time-locked savings product: you deposit a lump sum for a fixed term — anywhere from a few months to several years — in exchange for a fixed interest rate that's typically higher than a standard savings account. The trade-off is access: withdrawing before the term ends usually triggers an early withdrawal penalty. This calculator projects what a CD will be worth at maturity, so you can compare the fixed return against other options before locking your money up.
The Formula
Where P is your initial deposit, r is the annual percentage yield (APY) as a decimal, and months is the CD's term. This assumes monthly compounding, a common (though not universal) schedule for CDs — some compound daily or quarterly instead, which produces a very slightly different result for the same APY, since APY already standardizes for the compounding frequency used.
Worked Example
A $10,000 deposit into a 24-month CD at 4.5% APY:
Over the 2-year term, this CD earns about $940 in interest — a fixed, predictable return regardless of what happens to interest rates or markets during that period, which is the core appeal of a CD versus a variable-rate savings account or a market investment.
Who Should Use a CD
Use it if you have a lump sum you're confident you won't need before the term ends, and you want a guaranteed, fixed return higher than a typical savings account.
Skip it if you might need the funds unexpectedly — the early withdrawal penalty can erase most or all of the interest advantage over a savings account, and in some cases eat into principal on very early withdrawals.
Common Mistakes to Avoid
The most common mistake is not shopping around — CD rates vary meaningfully between banks and credit unions for the same term, and online banks often offer noticeably higher APY than large traditional banks. A second mistake is locking a large sum into a single long-term CD when rates might rise — a "CD ladder" (splitting funds across CDs with staggered maturity dates) gives more flexibility to capture higher rates later without giving up the CD's guaranteed-return benefit entirely.
Worth knowing: CDs at FDIC-member banks are insured up to $250,000 per depositor, per bank, per ownership category — the same protection as a regular savings account, which is part of why CDs are considered a low-risk place to park cash.
Frequently Asked Questions
What is a CD?
A certificate of deposit (CD) is a savings product where you lock up a deposit for a fixed term in exchange for a fixed interest rate, typically higher than a regular savings account. Withdrawing early usually triggers a penalty.
What's the difference between APY and interest rate on a CD?
APY (Annual Percentage Yield) already accounts for compounding, while a simple interest rate doesn't. Banks advertise CD rates as APY specifically because it reflects the true annual return, including compounding effects.
What happens if I withdraw from a CD early?
Most CDs charge an early withdrawal penalty, often equal to a set number of months of interest (commonly 3-12 months depending on the CD's term). This can eat into both earned interest and, on very early withdrawals, sometimes a small amount of principal.
Are CDs FDIC insured?
Yes — CDs at FDIC-member banks are insured up to $250,000 per depositor, per bank, per ownership category, the same as regular deposit accounts.
Is a CD better than a savings account?
CDs typically offer higher rates than savings accounts in exchange for locking up access to the money for the term. They're better for funds you're confident you won't need before maturity; a savings account is better if you need flexible access.
How often do CDs compound?
It varies by bank — daily, monthly, and quarterly compounding are all common. This calculator uses monthly compounding as a reasonable default; check your specific CD's terms for the exact schedule.
Conclusion
A CD trades flexibility for a guaranteed, fixed return — worth it for money you won't need before maturity, and worth comparing carefully across banks, since the APY gap between the best and average offers is often larger than it looks.