CD calculator: Calculate your potential CD earnings
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Updated 10:02 p.m. UTC June 9, 2023
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Use our free CD calculator to see how much you can earn with different certificate of deposit (CD) terms. This can help you select the option that best fits your long-term financial needs.
What is a CD calculator?
A CD calculator is a tool that shows the amount you’ll earn on a CD after it matures. In exchange for locking away your funds for a set period of time, banks typically give relatively high annual percentage yields (APYs) that are guaranteed. Unlike in the stock market, you can count on these returns.
How to use our CD calculator
You’ll need a few pieces of information to plug in, but all of this can be easily found on the CD provider’s page.
- Deposit amount. This is the amount of money you’ll put in a CD. Many CDs have a minimum required amount, while others allow flexibility.
- APY. The interest rate that CDs offer can vary wildly, largely depending on the bank and the CD’s term. Note, smaller banks and credit unions tend to offer some of the better CD rates.
- Term. How long are you willing or able to lock away your cash? All CDs have terms and most have early withdrawal penalties. While interest rates typically increase with longer terms, consider carefully whether you’ll need the money early before committing. The sweet spot these days, thanks to the Federal Reserve’s decision to raise interest rates to quash inflation, is a term length around one or two years.
In the results, you’ll see the total amount of interest the CD will provide if you keep it for the full term. You’ll also see your initial balance and the entire value at the end.
If you’re curious, we included a schedule that you can expand to see a month-by-month breakdown of the interest earned per period and the cumulative interest in each period, showing exactly how your money grows.
How to use our CD calculator for CD laddering
CD laddering is an investment strategy that allows you to take advantage of the higher interest rates that typically come with longer CDs terms, without locking the entirety of your funds away for an extended period.
In a CD ladder, you purchase multiple CD terms of varying length, perhaps a one-year CD, a two-year CD and a three-year CD.
As each matures, you reinvest the funds into another three-year CD. This way, you’re never more than one year away from being able to cash out your CD even though, at the end of two years, all of your funds are in a longer-term CD, earning a higher rate.
Because each CD has its own APY and its own term, you’ll need to use the calculator once for each CD. Take note of the total interest earned at maturity, then add them up.
Consider this CD ladder example:
- A six-month CD.
- A one-year CD.
- An 18-month CD.
When the six-month CD matures, you can take your principal and interest, and invest it into a new 18-month CD. After the one-year CD matures, you again purchase an 18-month CD to keep the ladder intact. And on and on.
This strategy helps grow your savings, while also allowing you to take advantage of rising interest rates.
Benefits of using a CD calculator
The CD calculator tells you exactly how much you’ll earn and when, showing you the dollar amount rather than a percentage.
While a larger APY is obviously better in most cases, doing the mental math on compounding interest can be tricky. Instead of ballparking your earnings, use our CD calculator to determine how much you stand to gain by investing in a CD.
Choosing the best CD for you
Certificates of deposit are a tool that help you meet your financial needs, which means the best CD for you depends on what you’re saving for.
One option is to fund a CD with cash you need for a particular purchase at a particular time. For instance, a one-year CD would be ideal if you’re looking to buy a new car in 12 months. Not only will you earn interest, but you’ll stop yourself from spending money you have earmarked for a new ride.
Another option, especially if you don’t have a big need in the near future, is to create a CD ladder so you take advantage of high CD rates while also enjoying a steady stream of income. In this scenario, you’d fund a six-month, one-year and 18-month CD, and then purchase a new 18-month CD every six months.
Lastly, you can opt for a no-penalty CD if you want a solid yield while also retaining the ability to get at all of your money at any time without paying a fee.
Different types of CDs
CDs of different terms
CD terms can vary from 28 days to ten years and beyond. Typically, the longer the term, the higher the APY.
However, rates are currently highest for terms of about one or two years. That’s because the Fed has raised short-term interest rates to put a lid on inflation. Longer-term rates are lower because banks believe the economy will ultimately slow down in the years to come, which will result in future rate cuts by the Fed.
Here are some of the most popular CD terms:
CDs from financial institutions
Due to their own business needs, banks, credit unions and other financial institutions that offer CDs will have different options for investors with various term ranges and rates.
- Bank of America CD rates.
- Chase Bank CD rates.
- Capital One 360 CD rates.
- Citibank CD rates.
- Wells Fargo CD rates.
Will CD rates go higher?
CD rates went up dramatically since the early part of 2022 when the Federal Reserve started raising interest rates to moderate sky-high inflation. With price growth starting to slow closer to the Fed’s 2% target, and the economy showing signs of slowing down a bit, the Fed has adopted more of a holding pattern with regard to rates. Therefore, it’s unlikely CD rates will explode to the same degree it did in 2023, but individual banks may hike rates in order to attract customers.
Typically CDs have monthly compounding interest. Some CDs offer daily compounding interest. The more frequently it compounds, the faster a CD will grow.
Yes, simply use it as you would for a traditional CD.
This depends on your goal. It may be best to get a CD with the highest rate available that matures before you need it.
With inflation moderating, and the economy decelerating from its post-pandemic high, it is unlikely that the Fed will substantially increase rates in 2024. In fact, many analysts expect rates to fall a bit as the economy weakens.
Yes, CDs are subject to the same FDIC insurance as checking or savings accounts.
A CD ladder is a strategy where you spread your savings across multiple CDs of differing terms that mature on a consistent basis. The benefit is that you have a steady stream of income and retain the ability to react to a changing interest rate environment.
Let’s say you had $7,500 to put towards CDs. In a CD ladder, you could opt for CDs with terms of three, six and nine months. After every three months, you would opt for a new nine-month CD to keep the ladder intact.
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
Blueprint has an advertiser disclosure policy. The opinions, analyses, reviews or recommendations expressed in this article are those of the Blueprint editorial staff alone. Blueprint adheres to strict editorial integrity standards. The information is accurate as of the publish date, but always check the provider’s website for the most current information.
