Calculate your Certificate of Deposit returns with compound interest, tax considerations, and detailed year-by-year breakdown.
Amount you plan to deposit
Annual Percentage Yield (APY)
How often interest is compounded
Number of years
Additional months (0-11)
Tax rate on interest earnings (0% for tax-free accounts)
A CD is a type of savings account with a fixed term and fixed interest rate. You agree to keep your money in the account for a specific period (the term), and in exchange, the bank pays you a higher interest rate than a standard savings account.
Compound interest is interest earned on both your initial deposit and the interest that has already accumulated. Most CDs compound interest daily or monthly, which helps your balance grow faster over time.
APR (Annual Percentage Rate) is the simple interest rate, while APY (Annual Percentage Yield) accounts for the effect of compounding. APY gives you a more accurate picture of what you'll actually earn in a year.
Yes, in most cases, the interest you earn on a CD is considered taxable income by the IRS in the year it is credited to your account, even if you don't withdraw it until the CD matures.
If you take your money out of a CD before the term ends, banks typically charge an early withdrawal penalty. This penalty is often a certain number of months' worth of interest.
Conservative 10-year CD at 5% APY
High-yield 10-year CD at 6.5% APY
Long-term 10-year CD at 4.25% APY
Premium 10-year CD at 7% APY
A Certificate of Deposit (CD) is a time deposit offered by banks and credit unions. It features fixed terms and typically offers higher interest rates than regular savings accounts.
Formula: A = P(1 + rac{r}{n})^{nt}
Where = final amount, = principal, = annual rate, = compound frequency, = time in years
Compound interest is the interest calculated on both the initial principal and the accumulated interest from previous periods. It's often called "interest on interest."
Tax Consideration: Interest from CDs is taxable income. Higher tax brackets reduce your effective return.
Precise compound interest formula with all frequencies
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