How to use this CD calculator
- Enter the amount you plan to deposit.
- Enter the rate and choose APY or APR. Banks advertise CDs by APY. If you only have the interest rate, choose APR and the calculator works out the APY.
- Enter the term in months (12 for a 1-year CD, 60 for a 5-year CD) and the compounding frequency from the CD’s disclosure.
- Optionally add your tax rate and the early withdrawal penalty under “Taxes & early withdrawal” to see after-tax interest and what cashing out early would cost.
How CD interest works
A certificate of deposit is a bank deposit that you agree to leave untouched for a fixed term, usually in exchange for a fixed rate. Investor.gov describes typical terms as anywhere from six months to five years. When the CD matures you get your deposit back plus the interest it earned; if you redeem it early, the terms may require an early withdrawal penalty or the loss of part of the interest.
Banks figure interest daily, at a daily rate of at least 1/365 of the interest rate (Regulation DD § 1030.7), and add it to the CD on the schedule in the disclosure. If the interest stays in the CD, it compounds, and the balance at maturity is:
A = P × (1 + r/n)^(n × t) = P × (1 + APY)^t
- A
- balance at maturity
- P
- deposit
- r
- annual interest rate (APR) as a decimal
- n
- compounding periods per year (365 daily, 12 monthly, 4 quarterly)
- t
- term in years (months ÷ 12)
Worked example
Take $10,000 at a 4% interest rate compounded daily. The APY is (1 + 0.04/365)365 − 1 = 4.0808%. After 12 months the CD is worth $10,000 × (1 + 0.04/365)365 = $10,408.08, or $408.08 of interest. Over a 2-year term, the same CD grows to $10,832.82. Some CDs pay interest out to you by check or transfer instead of adding it to the balance; in that case the interest does not compound, and the total is slightly lower.
APY vs. APR on a CD
Under the Truth in Savings Act’s Regulation DD, the interest rate is “the annual rate of interest paid on an account which does not reflect compounding,” while the annual percentage yield reflects “the total amount of interest paid on an account, based on the interest rate and the frequency of compounding for a 365-day period.” People often call the interest rate the APR, which is how this calculator labels it.
Regulation DD’s Appendix A defines the APY as 100 × [(1 + Interest ÷ Principal)365 ÷ days in term − 1]. For the worked example, the interest of $408.08 on $10,000 over 365 days gives 4.081%, the same APY as above. With annual compounding the APY equals the interest rate; the more often interest compounds, the higher the APY:
| Interest rate (APR) | APY daily | APY monthly | APY quarterly | APY annually |
|---|---|---|---|---|
| 3.00% | 3.045% | 3.042% | 3.034% | 3.000% |
| 4.00% | 4.081% | 4.074% | 4.060% | 4.000% |
| 5.00% | 5.127% | 5.116% | 5.095% | 5.000% |
How much interest does a $10,000 CD earn?
Interest earned by $10,000 held to maturity, with interest left in the CD, before taxes. Longer terms earn more in total, though CD rates often differ by term. For reference, the FDIC’s national average rate on a 12-month CD was 1.73% as of September 21, 2026 (FDIC national rates).
| Term | 3% APY | 4% APY | 5% APY |
|---|---|---|---|
| 6 months | $148.89 | $198.04 | $246.95 |
| 1 year | $300.00 | $400.00 | $500.00 |
| 2 years | $609.00 | $816.00 | $1,025.00 |
| 3 years | $927.27 | $1,248.64 | $1,576.25 |
| 5 years | $1,592.74 | $2,166.53 | $2,762.82 |
Early withdrawal penalties
Regulation DD requires a CD’s disclosures to state that a penalty will or may be imposed for early withdrawal, how it is calculated and when it applies (§ 1030.4). Each bank sets its own penalty. This calculator models it as a number of months of interest: the penalty is the deposit × the interest rate × months ÷ 12; for the default CD, three months of interest is $98.06, about the interest earned in the first 3 months.
The IRS says you must report the full interest shown in box 1 of Form 1099-INT and can deduct the early withdrawal penalty, shown separately in box 2, on Schedule 1 (Form 1040) (IRS Publication 550). Brokered CDs bought through an investment firm work differently: according to Investor.gov, they generally do not have early withdrawal penalties like bank CDs, but if you sell one on the secondary market before maturity you may lose some of your original investment.
What is a CD ladder?
A CD ladder splits your money across CDs that mature at different times, so part of it becomes available regularly while the rest keeps earning a fixed rate. When the shortest CD matures, you can spend the money or reinvest it in a new long-term CD at the top of the ladder.
Example: divide $25,000 into five $5,000 CDs with terms of 1 to 5 years. To keep the math simple, all five earn 4% APY here; in practice rates vary by term and change over time.
| CD | Deposit | Matures after | Value at maturity | Interest |
|---|---|---|---|---|
| Rung 1 | $5,000 | 1 year | $5,200.00 | $200.00 |
| Rung 2 | $5,000 | 2 years | $5,408.00 | $408.00 |
| Rung 3 | $5,000 | 3 years | $5,624.32 | $624.32 |
| Rung 4 | $5,000 | 4 years | $5,849.29 | $849.29 |
| Rung 5 | $5,000 | 5 years | $6,083.26 | $1,083.26 |
One CD matures every year, and together the five earn $3,164.88 of interest by the time the last one matures. If you reinvest each maturing CD in a new 5-year CD, after four years every rung is a 5-year CD, yet one still matures every year.
Is your CD insured?
CDs at FDIC-insured banks are deposits. The FDIC lists “time deposits such as certificates of deposit (CDs)” among the products it covers, and its standard coverage is $250,000 per depositor, per FDIC-insured bank, for each account ownership category (FDIC). Coverage includes accrued interest as well as principal (FDIC deposit insurance FAQs), so a large CD near $250,000 can grow past the limit by maturity. Spreading money across banks or ownership categories keeps it covered.
Not sure a CD is right for you? Compare it with a flexible account using the savings calculator, or model longer-term growth with the compound interest calculator.
Frequently asked questions
How much interest will $10,000 earn in a 12-month CD?
At 4% APY, $10,000 earns $400.00 in 12 months, because the APY is by definition the interest a deposit earns over a year. At 3% APY it would earn $300.00, and at 5% APY $500.00. For comparison, the FDIC’s national average 12-month CD rate was 1.73% as of September 21, 2026, about $173.00 a year on $10,000.
Is CD interest compounded daily or monthly?
It depends on the bank, which must disclose how often interest is compounded and credited under Regulation DD, so check the CD’s disclosure. The difference between schedules is small: a 4% interest rate is 4.081% APY compounded daily and 4.074% compounded monthly. Compare CDs by APY, which already includes compounding.
What happens if I withdraw money from a CD early?
You usually pay an early withdrawal penalty or give up part of the interest, and the bank’s disclosure must say how the penalty is calculated. For example, three months of interest on $10,000 at a 3.92% rate is about $98.06. If you withdraw before earning that much, the penalty can reduce your original deposit. The penalty is deductible on Schedule 1 of Form 1040.
Are CDs FDIC insured?
Yes. CDs at an FDIC-insured bank are deposits, covered up to $250,000 per depositor, per insured bank, for each account ownership category. If you buy brokered CDs through an investment firm, check that the issuing bank is FDIC-insured and that your total deposits at that bank stay within the limit.
Do I pay taxes on CD interest?
Yes. The IRS treats interest on certificates of deposit as taxable interest income, and the bank reports it to you in box 1 of Form 1099-INT. At a 22% tax rate, the $400.00 of interest in the example leaves about $312.00 after federal tax.
Is a CD better than a high-yield savings account?
A fixed-rate CD locks in its rate for the term, while a savings account rate can change at any time; in exchange, CD money is tied up and early withdrawals cost a penalty. A CD suits money you will not need before maturity. For an emergency fund you might need any day, a savings account keeps it available. Compare the two with our savings calculator.