CD Calculator
Calculate certificate of deposit (CD) returns, compare APY, estimate monthly and daily compounding, and plan laddering strategies. Includes 3-month, 6-month, and high-yield CD options.
CD Calculator
Understanding Certificate of Deposits
What is a CD?
A Certificate of Deposit (CD) is a time deposit offered by banks and credit unions that pays a fixed interest rate for a specified term. CDs are FDIC insured up to $250,000, making them one of the safest investment options available.
How CD Rates Work
CD rates are typically higher than savings accounts because you're committing your money for a set period. Longer terms usually offer higher rates, though this isn't always the case in inverted yield curve environments.
CD Laddering Strategy
CD laddering involves investing in multiple CDs with different maturity dates. This strategy provides regular access to your money while maximizing returns and reducing interest rate risk.
When to Use CDs
CDs are ideal for short-term goals (1–3 years), emergency fund supplements, conservative investment strategies, and when you want to lock in attractive rates in a high-interest environment.
Key Considerations
- Early withdrawal penalties can significantly reduce returns
- CDs are best for money you won't need immediately
- Shop around for the best rates between different banks
- Consider the impact of inflation on real returns
- Plan for reinvestment when CDs mature
CD Calculator FAQs
How does a CD calculator work?
A CD calculator estimates how much interest you’ll earn on a certificate of deposit by factoring in the deposit amount, APY, compounding frequency, and term length.
What is a CD calculator APY?
A CD calculator with APY shows your annual percentage yield, which reflects the real return on your CD after compounding is considered.
What is the difference between daily and monthly compounding?
A CD calculator compounded daily adds interest more frequently than monthly, leading to slightly higher returns. Daily compounding benefits larger deposits or longer terms.
Can I use this instead of a Bankrate or NerdWallet CD calculator?
Yes, this calculator works similarly to the Bankrate CD calculator and NerdWallet CD calculator, but with added flexibility to test daily, monthly, and custom terms.
How do I calculate interest for 3-month or 6-month CDs?
A 3-month CD calculator or 6-month CD calculator shows short-term returns. Enter your deposit amount, rate, and term length to see interest earned.
What is a high-yield CD calculator?
A high-yield CD calculator helps estimate earnings from CDs offering higher-than-average rates. These are often available from online banks.
Can I estimate penalties with a CD early withdrawal calculator?
Yes, many CD calculators let you factor in early withdrawal penalties. This one is designed to help you plan CD investments and avoid unexpected losses.