CD Calculator

US banks must quote a CD's annual percentage yield, or APY. The APY already counts the interest earned on interest during the year, so the balance grows by the APY directly:

If your bank gives a nominal rate (APR) instead, the tool turns it into an APY first, where $n$ is the number of times a year interest is added:

A nominal 4% gives an APY of 4.081% with daily compounding and 4.074% with monthly compounding. Never compound an APY a second time: 4% APY on $10,000 earns $400.00 in a year, not $408.08.

An early withdrawal penalty is usually stated as months of interest. The tool charges that many months of simple interest on the deposit, at the APR, and takes it from the balance. What is left is the cash if broken line on the chart.

Priya's one-year CD

Priya puts $10,000 into a 12-month CD at 4.00% APY. At maturity she gets $10,400.00, so $400.00 of interest. If she pays 22% income tax on it, she keeps $312.00.

Her bank's penalty is 3 months of interest, or $98.06. Break it after 1 month and she gets $9,934.68, less than she put in. From month 3 the interest covers the penalty and she would get at least her deposit back. Open this example in the tool

Tom wonders whether to break his CD for 5%

Tom has $20,000 in a 2-year CD at 4% APY. Six months in, another bank offers 5%. His penalty is 6 months of interest, $392.23, so breaking now leaves $20,003.85 to move.

At 5% for the 18 months left, that grows to $21,522.74. Keeping the old CD gives $21,632.00, so staying put wins by $109.26. The new rate would have to beat 5.36% APY. At 5.5% the switch would come out $44.66 ahead. Open this example in the tool

Ruth and the insurance limit

Ruth moves $240,000 into one bank's 5-year CD at 4.25% APY. It matures at $295,523.19. The FDIC limit of $250,000 counts interest, so $45,523.19 would sit above it if the bank failed near the end of the term. Opening part of it as a joint account, or at a second bank, keeps it all insured. Open this example in the tool

The value at maturity is what the bank pays on the last day of the term, before tax. The interest is taxable in the year the bank credits it, even on a multi-year CD you have not cashed in, and the bank reports it on Form 1099-INT (IRS Publication 550). Turn on tax to see what you keep.

Switch to today's dollars to take inflation out. If the real figure is below your deposit, the CD has kept your money safe but not kept up with prices.

The “deposit back from” month tells you how long the money is truly locked. Before that month, a withdrawal costs you part of what you put in. Federal rules only set a floor: at least 7 days of simple interest on money taken out in the first 6 days (Regulation D, 12 CFR 204.2). The rest is up to the bank, and it must be in your account disclosure.

FDIC insurance covers $250,000 per depositor, per insured bank, for each ownership category, and that includes interest (FDIC deposit insurance FAQs). Credit unions have the same limit through the NCUA.

• Treating the APY as a rate to compound. The APY is the yearly result. Enter it as APY, and the compounding setting no longer matters.
• Assuming the penalty only takes interest. If you break a CD before the interest covers the penalty, many banks take the rest from your deposit, as in Priya's first month.
• Comparing the new rate with the old one. To switch, the new rate must make up the penalty in the months left. Use the break-even APY, not the difference in rates.
• Forgetting the interest when checking insurance. A $245,000 deposit is under the limit today but can be over it by maturity.
• Missing the grace period. Many CDs renew on their own at maturity for the same term. Your disclosure states the grace period, a short window to take the money out without a penalty.