How it works
A Certificate of Deposit is a fixed-term savings account where you agree to keep your money deposited for a set period in exchange for a guaranteed interest rate. This calculator shows you the total value—principal plus interest—when your CD reaches maturity.
You provide three pieces of information: the amount you're depositing, the annual percentage yield (APY) the bank is offering, and how long you'll keep the money locked in (in months). The calculator then compounds the interest over your term and displays your maturity value and total interest earned.
The formula
A = P × (1 + r/n)^(n×t)
Where:
- A = maturity value (final amount)
- P = principal (your initial deposit)
- r = annual interest rate as a decimal (APY ÷ 100)
- n = compounding frequency per year (typically 12 for monthly, 365 for daily)
- t = time in years
The interest earned is simply: Interest = A − P
Worked example
Let's say you deposit $5,000 in a 12-month CD offering 4.50% APY, compounded monthly.
Step 1: Convert inputs
- Principal (P) = $5,000
- Annual rate (r) = 4.50% ÷ 100 = 0.045
- Compounding frequency (n) = 12 (monthly)
- Time (t) = 12 months ÷ 12 = 1 year
Step 2: Apply the formula
A = 5,000 × (1 + 0.045/12)^(12×1)
A = 5,000 × (1 + 0.00375)^12
A = 5,000 × (1.00375)^12
A = 5,000 × 1.04596
A = $5,229.80
Step 3: Calculate interest earned
Interest = $5,229.80 − $5,000 = $229.80
After one year, your $5,000 grows to $5,229.80. The bank paid you $229.80 in interest.
Another example: longer term, higher rate
Deposit $10,000 at 5.25% APY for 36 months (3 years):
A = 10,000 × (1 + 0.0525/12)^(12×3)
A = 10,000 × (1.004375)^36
A = 10,000 × 1.17065
A = $11,706.50
Interest earned = $1,706.50
Common mistakes
Confusing APY with APR: APY includes the effect of compounding, while APR does not. Always use APY for CD calculations—it's the true yield you'll receive.
Forgetting to convert months to years: If your term is 18 months, divide by 12 to get 1.5 years before plugging into the formula. The calculator handles this automatically, but understanding it helps you verify results.
Assuming you can access your money anytime: CDs are fixed-term products. Withdrawing early typically triggers a penalty that reduces your earnings. Plan your CD strategy around when you'll actually need the funds.
Ignoring rate differences: A 0.5% difference in APY might seem small, but over 5 years on a $25,000 deposit, it's worth roughly $650 in extra interest. Shop around before committing.
This calculator provides an estimate based on the inputs you supply. It assumes the stated APY remains constant and that you hold the CD until maturity. Actual results may vary slightly due to rounding or changes in how your bank compounds interest. Not professional financial advice.