CD Calculator
- Deposit
- Interest
Keep the $50,000.00 untouched for 12 months to collect $2,000.00; cashing out early would cost about $491.06 of interest.
How the CD calculation works
Enter the rate the bank quotes
US banks must show the APY on a CD. If you only have the stated rate, switch the select to “Interest rate” and pick the compounding; the calculator converts it with APY = (1 + r/n)^n − 1.
Maturity value = deposit × (1 + APY)^(months ÷ 12)
$50,000 in a 12-month CD at a 4.00% APY grows to $52,000.00, so it earns $2,000.00 of interest.
Shorter or longer terms scale the same way
The same $50,000 at 4.00% APY for 6 months grows to $50,990.20, and for 24 months to $54,080.00, because interest earns interest.
Penalty = deposit × stated rate × penalty months ÷ 12
A 4.00% APY compounded monthly is a 3.928% stated rate. A 3-month penalty on $50,000 is about $491.06, roughly a quarter of the year's interest.
Worked example. A business parks $50,000 of its cash reserve in a 12-month CD paying a 4.00% APY, compounded monthly. At maturity it gets back $52,000.00, which is $2,000.00 of interest. If it had to break the CD early, a penalty of 3 months of interest would cost about $491.06.
CD FAQ
How do you calculate CD interest?
Multiply the deposit by (1 + APY) raised to the term in years, then subtract the deposit. $50,000 at a 4.00% APY for 12 months earns $50,000 × (1.04^1 − 1) = $2,000.00.
Should I enter the APY or the interest rate?
Use whichever the bank shows, and set the select to match. The APY already includes compounding, so the compounding choice only changes the stated rate and the penalty, not the maturity value.
How is a CD early-withdrawal penalty calculated?
Most banks charge a set number of months of simple interest on the amount withdrawn, e.g. 3 months for a 1-year CD. Enter the months from your CD's terms; the calculator charges deposit × stated rate × months ÷ 12. Check the exact method in your account agreement.
Can the early-withdrawal penalty be more than the interest earned?
Yes. If you break the CD in its first months, the penalty can exceed the interest paid so far, and the bank may take the difference out of the deposit.
Is a CD a good place for a business cash reserve?
It suits money you are sure you will not need before the term ends, because the rate is fixed and FDIC-insured up to the limits. Keep the cash you may need at short notice in a savings or money market account instead.
Is CD interest taxable?
Yes. CD interest is taxable income in the year it is credited, even if you do not withdraw it, and the bank reports it on Form 1099-INT.
Sources: CFPB: Regulation DD (Truth in Savings), APY rules · FDIC: Deposit insurance