CD Calculator
Certificate of Deposit interest calculator
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How CDs Work
A Certificate of Deposit (CD) is a time deposit that pays a guaranteed, fixed interest rate in exchange for leaving your money untouched for a specified term. CDs are FDIC-insured up to $250,000 per bank, making them one of the safest investments available.
Current 2026 CD rates from top online banks run 4.5–5.25% APY for 6–12 month terms. Longer terms don't always pay more — the yield curve can be flat or inverted, meaning short CDs sometimes beat long ones. Always compare current rates before committing.
CD Ladder Strategy
A CD ladder splits your deposit across multiple CD terms (e.g., 1/3 each in 1, 2, 3 year CDs). As each matures, reinvest in the longest term. This provides regular access to funds while capturing higher long-term rates. If rates rise, you benefit as shorter CDs mature and can be reinvested at better rates.
APY vs APR
APY (Annual Percentage Yield) accounts for compounding. APR (Annual Percentage Rate) does not. For a CD with 4.75% nominal rate compounding daily: APY = (1 + 0.0475/365)^365 - 1 = 4.862%. Banks are required to advertise APY for savings products — it's the true annualized return.
Early Withdrawal Penalty
Most CDs charge a penalty for early withdrawal, typically expressed in months of interest. Common penalties: 3-month CD: 1 month interest. 6–12 month: 3 months interest. 1–3 year: 6 months interest. 4–5 year: 12 months interest. Some 'no-penalty CDs' allow early withdrawal with no fee but pay lower rates. Banks may reduce principal if withdrawal happens very early.
CD vs HYSA
CDs: guaranteed rate for the full term, early withdrawal penalty, slightly higher rates than HYSAs. High-yield savings: flexible withdrawals, rates change with the Fed funds rate, no penalty. When rates are expected to fall, locking in a CD makes sense. When rates are expected to rise, HYSAs let you capture higher rates as they increase.
CD rates and terms vary by institution. Early withdrawal penalties are estimates based on common industry practices — your specific CD agreement governs actual penalties.
Frequently Asked Questions
What is a CD (Certificate of Deposit)?+
A CD is a savings product offered by banks and credit unions. You deposit money for a fixed term (3 months to 5 years), and the bank pays a guaranteed interest rate. At maturity, you get your deposit back plus interest. CDs are FDIC-insured up to $250,000 per bank. They're safer than stocks but less liquid. The trade-off: your money is locked up for the term (with penalties for early withdrawal).
What are the best CD rates right now?+
As of 2026, top online banks are offering: 3-month CDs: 4.75–5.25% APY. 6-month: 4.75–5.25%. 12-month: 4.50–5.00%. 18-month: 4.25–4.75%. 2-year: 4.00–4.50%. 5-year: 3.75–4.50%. Online banks (Marcus, Ally, Discover, Capital One 360, Synchrony) consistently outperform traditional brick-and-mortar banks. Credit unions also offer competitive rates. Always compare current rates as they change with the Fed.
How do I calculate CD interest?+
Maturity value = Deposit × (1 + APY)^(term in years). Example: $10,000 at 4.75% APY for 12 months = $10,000 × 1.0475^1 = $10,475. Interest earned = $475. For 6 months: $10,000 × 1.0475^0.5 = $10,235. Note: banks advertise APY (which already accounts for compounding frequency) so you can use this simple formula regardless of compound frequency.
What happens when a CD matures?+
When a CD matures, you typically have a grace period (7–10 days) to withdraw funds or change terms without penalty. If you do nothing, the bank usually auto-renews the CD for the same term at the current rate (which may be lower). Always mark your maturity date on your calendar. Review current rates before auto-renewal — sometimes you can do better elsewhere.
Are CDs worth it?+
In 2026 with rates at 4.5–5%+, CDs offer compelling risk-free returns — better than most bonds and competitive with dividend stocks without the risk. For money you don't need for 6–12 months, CDs make sense. Not worth it: money you need immediate access to (keep in HYSA), or money you can invest long-term (stocks historically return 7–10% annually, beating CDs over long periods despite short-term risk).
What is the CD early withdrawal penalty?+
If you withdraw before maturity, you forfeit a portion of earned interest (rarely touches principal unless withdrawal is very early). Typical penalties: 3-month CD: 90 days interest. 6-month CD: 90 days interest. 1-year CD: 180 days interest. 2-year CD: 180 days interest. 5-year CD: 365 days interest. Example: $10,000 at 5% for 12 months, withdrawing after 4 months. Interest earned = $167. Penalty = 180 days × (5%/365) × $10,000 = $247 — you'd lose money vs. holding to 6 months.
What is a no-penalty CD?+
No-penalty CDs allow early withdrawal without forfeiting interest, usually after a waiting period (6–7 days from opening). They typically pay 0.25–0.75% less than traditional CDs. Best for: money you might need before maturity but want to earn more than an HYSA. The trade-off: slightly lower rate for more flexibility. Ally, Marcus, and CIT Bank offer competitive no-penalty CDs.
How are CD earnings taxed?+
CD interest is taxed as ordinary income in the year it's credited, whether or not you withdraw it. The bank sends a 1099-INT. For a 2-year CD, you'll pay taxes on interest earned each year, not just at maturity. Strategy: if you're in a high bracket now and expect to be in a lower bracket later, favor CDs that mature in lower-income years. Holding CDs in a Roth IRA eliminates all taxes on earnings.
What is a brokered CD?+
Brokered CDs are sold by brokerages (Fidelity, Schwab, Vanguard) rather than directly by banks. Advantages: buy CDs from multiple banks in one place, often higher rates, can sell on the secondary market before maturity (unlike bank CDs). Risks: secondary market prices fluctuate with interest rates, creating potential losses if sold early. Brokered CDs are still FDIC-insured (up to $250,000 per issuing bank).
Should I put my emergency fund in a CD?+
Generally no. Emergency funds need instant liquidity. CDs have withdrawal penalties. Better options: High-yield savings account (HYSA) at 4–5% APY with immediate access. Money market account with check-writing. Exception: no-penalty CD for the bulk of your emergency fund, with 1–2 months expenses in a regular savings/checking account for immediate needs. The key principle: don't lock up money you might need urgently.