Certificate of Deposit Calculator


What is a Certificate of Deposit?

A certificate of deposit (CD for short) is a financial instrument where you agree to deposit your money for a fixed time in exchange for interest. 

Typically CDs are issued by banks and are categorized as a low-risk but low-return type of investment. Usually, the returns from CDs are higher than from savings accounts. 

The value of interest rate varies depending on the length of the agreement and sometimes on the initial amount of money.

So while the final interest rate is the bank's internal policy, it depends on federal funds rates controlled by central banks or the Federal Reserve in the U.S., which depends on their current policy against inflation. 

The interest rate of a CD is most often constant during the whole period of the agreement, although there are types of CDs with variable interest rates.

How do CDs differ from savings accounts?

The most crucial difference between CDs and savings accounts is access to the deposit. Funds on savings accounts can be accessed at any time with no constraints, while if you wish to withdraw from the certificate of deposit, you need to break the agreement, and you will lose the interest earned to date. 

The second reason is that CDs typically have higher interest rates than savings accounts, but exceptions may exist.

How can this CD calculator help you?

This simple online CD calculator lets you determine the potential interest earnings from the Certificate of Deposit. The tool can calculate the future returns from various types of deposits regardless of the term, compounding frequency, and effective interest rate.

How to use this CD Calculator?

Our tool is easy to use. You only need to fill out the form above and click Calculate. 

However, in order to interpret results correctly, you must understand the meaning of all the fields from the form.

Initial deposit

It’s the money you plan to put into the bank to start the deposit. 


The number of months or years you wish to deposit your money for. 

Interest rate

The interest rate offered by your bank. 

Compounding frequency

This is an important parameter that affects your effective interest rate APY. The more often the interests are compounded, the higher the real return from CD is. Our tool lets you choose between monthly, quarterly, and annual compounding frequency.

Annual percentage yield (APY)

APY represents the effective interest rate which considers the declared interest rate from the agreement and the compounding frequency. For the frequent compounds, the effective interest rate APY is higher because the interests earned in the previous period are the base for the future interest calculation.

How do you calculate CD yield?

In order to calculate the yield of a Certificate of Deposit, you should use the compound interest formula.

CD formula

If you wish to calculate the future value of your deposit, use the following formula.

A = P(1+r/n)(nt)


A = the future value of the initial amount

P = the initial amount

r = the annual interest rate as a decimal number

n = the number of times that interest is compounded per year

t = the number of years the money is invested. (If you wish for a shorter period, you can substitute 1/4 for a quarter)

As a result of this formula, you will receive the final value of your investment with all accumulated interests. 

CD yield formula

If you wish to find out the effective interest rate APY of the certificate of deposit, use the formula below. 

APY = (1+r/n)(nt) - 1


Created by Lucas Krysiak on 2022-06-11 14:29:10 | Last review by Mike Kozminsky on 2022-06-24 13:46:31

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