CD Calculator

A Certificate of Deposit (CD) is a savings product offered by banks and credit unions that provides a fixed interest rate in exchange for keeping your money deposited for a specific term. CDs typically offer higher interest rates than regular savings accounts but require you to leave your funds untouched for the entire term to avoid penalties.

CD interest is calculated using compound interest formula: A = P(1 + r/n)^(nt), where A is the maturity value, P is the principal amount, r is the annual interest rate (in decimal), n is the number of compounding periods per year, and t is the time in years. More frequent compounding results in higher returns.

Early withdrawal from a CD typically results in a penalty, which varies by financial institution and CD term. Penalties are often calculated as a number of months' interest (e.g., 3-12 months) or a percentage of the interest earned. The specific penalty terms should be outlined in your CD agreement.

Yes, CDs offered by FDIC-insured banks are protected up to $250,000 per depositor, per insured bank, for each account ownership category. This insurance protects your principal and accrued interest if the bank fails. Credit union CDs are similarly insured by the NCUA up to the same limits.

A CD ladder is an investment strategy where you divide your investment across multiple CDs with different maturity dates. For example, instead of investing $10,000 in one 5-year CD, you might invest $2,000 each in 1-year, 2-year, 3-year, 4-year, and 5-year CDs. As each CD matures, you reinvest it in a new 5-year CD, creating a rolling ladder that provides regular access to funds while maintaining higher long-term rates.