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CD Calculator: Certificate of Deposit Earnings
Enter the deposit, the stated rate, how often interest is compounded and the term. See the value at maturity, the interest earned, the annual percentage yield and what is left after tax.
What a certificate of deposit is
A certificate of deposit, also called a term deposit or fixed deposit in many countries, is a savings product where you lock a sum with a bank for a fixed term in return for a set rate. Because the bank knows the money will stay put, the rate is usually higher than on an instant-access account of the same bank. The trade-off is access: taking the money out early typically costs a penalty, often expressed as some months of interest, so check the terms before you commit.
Product names and protections vary between countries. This page uses the general idea of a fixed rate over a fixed term and is not tied to any one country's product rules.
How maturity value and APY are worked out
The balance grows by compounding: A = P × (1 + r ÷ n)n × t, where P is the deposit, r the stated rate as a decimal, n the number of compounding periods a year and t the term in years. Interest earned is A − P.
The annual percentage yield converts any compounding schedule into a single yearly figure: APY = (1 + r ÷ n)n − 1. It lets you compare a certificate that compounds daily with one that compounds yearly. For a stated rate of 5%, the APY is 5.00% when compounded yearly, 5.09% quarterly, 5.12% monthly and about 5.13% daily.
Comparing certificates fairly
- Compare APY with APY. A stated rate and a yield are not the same thing. Make sure both offers are quoted on the same basis.
- Account for the term. A higher rate on a five-year term is not obviously better than a lower rate on a one-year term, because you can reinvest at a different rate after a year.
- Read the penalty. If you might need the cash, the penalty can cancel the extra yield.
- Check what happens at maturity. Many certificates renew automatically at whatever rate applies then.
- Consider inflation. A yield below inflation preserves the number but not the purchasing power.
The optional tax input
Interest is taxable in many places, and the rate depends on your country, income and account type. The optional tax box simply multiplies the interest by the percentage you enter and subtracts it. It does not apply allowances, brackets or withholding rules. Leave it at zero for a pre-tax view, or enter your own marginal rate for a rough after-tax estimate. Because tax can also fall due on interest as it accrues rather than at maturity, confirm the timing with the provider or a tax professional.
Worked example
Someone places 25,000 in an 18-month certificate at 4.2% a year, compounded daily, and expects to pay 20% tax on the interest.
Inputs
| Deposit amount | 25000 |
|---|---|
| Stated annual rate | 4.2 % |
| Interest compounded | Daily |
| Term | 18 |
| Term is in | Months |
| Tax rate on interest (optional) | 20 % |
Result
1,625.57 interest before tax on a deposit of 25,000.00 over 18 months.
| Annual percentage yield (APY) | 4.2892% |
|---|---|
| Interest before tax | 1,625.57 |
| Tax on interest | 325.11 |
| Interest after tax | 1,300.46 |
| Value at maturity after tax | 26,300.46 |
Growth over the term
| When | Interest so far | Value |
|---|---|---|
| After 1 year | 1,072.30 | 26,072.30 |
| At maturity (18 months) | 1,625.57 | 26,625.57 |
- Formula: maturity value = deposit × (1 + rate ÷ n)^(n × years), where n is the number of compounding periods per year. Early withdrawal penalties and rate changes are not modelled.
Financial disclaimer: Results are estimates for planning and education. They are not financial, tax or legal advice. Fees, taxes, rates and rules vary by lender, product and country, so confirm figures with your provider or a qualified adviser before making decisions.
Frequently asked questions
How is the interest on a CD calculated?
The balance is multiplied by one plus the stated rate divided by the number of compounding periods, repeated for every period in the term. The interest is the final value minus the deposit.
What is the difference between the stated rate and APY?
The stated rate ignores compounding, while APY includes it. APY is the better figure for comparing offers because it shows what a year of compounding really pays.
Does daily compounding make a big difference?
Only a small one. At a 5% stated rate, daily compounding yields about 5.13% against 5.00% for yearly compounding.
What if I withdraw early?
Most certificates charge a penalty, often a number of months of interest. This calculator assumes you hold to maturity and does not model penalties.
Is the result a promise of what I will earn?
It is an estimate based on a fixed rate that you entered. Check the final terms with the provider, including any rate change at renewal.
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References and sources
- Investor.gov (U.S. SEC): introductory material on certificates of deposit and compound interest. Link
- Standard texts on effective annual yield: APY = (1 + r/n)^n − 1.