How the cD Calculator works
Banks quote CDs in APY, which already includes compounding, so the ending balance is simply the deposit grown at the APY for the term. That makes APY the one number to compare across banks regardless of how often each compounds.
Ending balance = Deposit × (1 + APY)months/12
Example: $10,000 in a 12 month CD at 4.5% APY ends at $10,450, earning $450 of interest. The same money in an 18 month CD at the same APY earns about $683.
Frequently asked questions
What happens if I withdraw a CD early?
Most banks charge an early withdrawal penalty of 3 to 12 months of interest. If you might need the money, a shorter term or a no-penalty CD usually beats paying the fee.
Is CD interest taxed?
Yes, CD interest is taxed as ordinary income in the year it is credited, even if you leave it in the CD, unless the CD sits inside an IRA.
APY vs interest rate, what is the difference?
The interest rate is the raw annual rate, while APY includes the effect of compounding. APY is always the fair comparison number and it is what this calculator uses.