How it works
A certificate of deposit (CD), called a savings certificate or time deposit in many countries, locks your money for a fixed term at a fixed rate. Banks quote that rate in one of two ways, and some certificates pay the interest out instead of adding it to the balance — the calculator handles all three.
APY: value = deposit × (1 + APY)months ÷ 12 APR compounded n times a year: value = deposit × (1 + APR ÷ n)n × months ÷ 12 · APY = (1 + APR ÷ n)n − 1 Interest paid out: interest = deposit × rate × months ÷ 12 (paid monthly as deposit × rate ÷ 12)Worked examples. $10,000 at 5% APY for 12 months grows to $10,500. At 5% APR compounded monthly it grows to $10,511.62, an APY of 5.116%. $10,000 at 4% APY for 3 years becomes $11,248.64. A certificate of 100,000 at 22% with monthly payout pays 1,833.33 every month — 66,000 over three years — and returns the 100,000 at the end.
APY vs APR
APY already includes compounding, so it is the number to compare between banks. APR is the nominal rate before compounding; the more often it compounds, the higher the real yield. In the US, banks must show the APY for deposit accounts under the Truth in Savings Act.
Before you lock your money
- Early withdrawal penalty: breaking a CD usually costs several months of interest.
- Inflation: if prices rise faster than the rate, the money buys less at maturity. Compare with the compound interest calculator, which can show today’s money.
- Taxes: interest is taxable in many countries; the calculator shows the pre-tax amount.
- Deposit insurance: US CDs at FDIC-insured banks are covered up to $250,000 per depositor, per bank, per ownership category.
Want to compare with monthly saving instead of a lump sum? Use the compound interest calculator. For percentage returns between two values, the percentage change calculator helps.