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CD Calculator: Interest and Value at Maturity
Find out how much a certificate of deposit will earn by the end of its term, and what you keep after tax.
How CD interest is calculated
Banks advertise CDs by APY (annual percentage yield), which already includes the effect of compounding. That makes the math simple: the value at maturity is Deposit × (1 + APY)years. For terms shorter than a year, the exponent is the fraction of a year, so a 6-month CD uses 0.5.
Examples
- $10,000 for 12 months at 4.25% APY earns $425.00 and matures at $10,425.
- $10,000 for 5 years at 4.00% APY earns $2,166.53, because each year's interest also earns interest.
- $25,000 for 6 months at 4.5% APY earns about $556: 25,000 × (1.0450.5 − 1).
At a 22% tax bracket, the $425 of interest in the first example leaves about $332 after federal tax. State tax may also apply, but interest on Treasury bills is exempt from state tax, which can make them a better deal than CDs in high-tax states.
CD ladders
A ladder splits your money across several CDs that mature at different times, for example a fifth each in 1-, 2-, 3-, 4- and 5-year CDs. Each year one matures, giving you access to cash, and you reinvest it at the longest term. You get close to long-term rates while keeping some money available every year.
Frequently asked questions
How much does a $10,000 CD earn in a year?
At 4.25% APY, a 12-month $10,000 CD earns $425. At 3% APY it earns $300. APY already includes compounding, so the interest for one year is simply the deposit times the APY.
Is CD interest taxable?
Yes. CD interest is taxed as ordinary income in the year it is credited, even if you leave it in the CD. Your bank sends a Form 1099-INT. CDs held in an IRA are taxed under IRA rules instead.
What happens if I cash out a CD early?
Banks charge an early withdrawal penalty, usually a number of months of interest: commonly 3 months on terms under a year and 6 to 12 months on longer terms. No-penalty CDs exist but pay a little less.
Are CDs safe?
CDs at FDIC-insured banks and NCUA-insured credit unions are protected up to $250,000 per depositor, per institution, per ownership category.