Deposits / certificate

CD calculator

A certificate of deposit pays a fixed rate for a fixed term, which makes the APY — not the nominal rate — the number worth comparing. This engine compounds the deposit to maturity, shows what each year earns, and prices the penalty if you take the money out early.

Term3.00 yrCompounding12×/yrPenalty3 mo

APY

4.594%

12 compounding periods a year

Maturity value

$28,606

After 3.00 years

Total interest

$3,606

On $25,000

Early withdrawal

$25,019

3 months of interest as penalty

Growth by year

Interest credited and the running balance at each anniversary.

4.59% APY

Growth by year
Year	Interest this year	Balance
Year 1	$1,148	$26,148
Year 2	$1,201	$27,350
Year 3	$1,256	$28,606

Assumes the rate does not change and interest stays in the CD.

Balance over the term

Compounding is smooth within the term even when interest is credited less often.

APY by compounding frequency

The same nominal rate produces a slightly different APY.

Canonical equations

The exact relationships implemented by this engine.

(1 + r/n)ⁿ − 1 · What the nominal rate is worth once compounding is included.

P(1 + r/n)^(n·t) · Interest stays in the account.

P · r · months / 12 · Most banks charge a fixed number of months of interest.

Show model notation and computationOpen the symbolic form, the variable definitions, and the step-by-step derivation when you need the detail.

A clear path from inputs to results.

A certificate of deposit pays a fixed rate for a fixed term, so the number worth comparing is the APY, not the nominal rate. This calculator compounds the deposit to maturity, shows what each year earns, and prices the penalty if you withdraw early.

Step-by-step methodWorked exampleAssumptions explained

Worked example

$25,000 at 4.5% for 3 years, compounded monthly

Inputs

Deposit $25,000.
Nominal rate 4.5%.
Term 3 years.
Monthly compounding.

Calculation path

1
APY: (1 + 0.045/12)^12 − 1 = 4.594%.
2
Maturity value: 25,000 × (1 + 0.045/12)^36 = $28,606.20.
3
Total interest: $3,606.20.
4
A 3-month penalty costs 25,000 × 0.045 × 3/12 = $281.25.
5
Leaving early nets roughly $25,000 plus interest earned minus that penalty.

Result

APY 4.594% · maturity $28,606.20 · 3-month penalty $281.25.

Interpreting the result

Monthly and daily compounding produce almost identical APYs at ordinary rates — the frequency matters far less than the rate itself. The real decision is term versus liquidity: a longer CD usually pays more, but the penalty for breaking it can wipe out months of interest, which is why the early-exit figure is shown next to the maturity figure.

Assumptions & limitations

The nominal rate is fixed for the whole term and interest remains in the account.

No additional deposits or withdrawals are made before maturity.

The penalty is modelled as a fixed number of months of interest on the original deposit, which is the common bank formula.

Federal and state tax on the interest is not deducted.

Frequently asked questions

Should I compare APY or the nominal rate?

APY. It already includes the effect of compounding, so it is the only fair comparison across banks with different compounding schedules.

What happens if I withdraw early?

Most banks charge a fixed number of months of interest. If the CD is young, the penalty can eat into principal; the early-withdrawal figure shows the net result.

Does compounding frequency matter much?

Barely at current rates. At 4.5%, annual versus daily compounding differs by about 0.05 percentage points — real, but smaller than the difference between two banks’ quoted rates.

Is a CD better than a high-yield savings account?

A CD usually pays more in exchange for locking the money. If you may need liquidity, compare the CD’s early-exit value with the savings rate over the same period.