Finance
CD Rate Calculator FAQ
Estimate maturity value, interest earned, and maturity date from APY, term, and start date.
FAQ
What does APY mean on a CD?+
APY stands for annual percentage yield and represents the real rate of return including the effect of compounding interest. Unlike a simple interest rate, APY lets you compare CDs with different compounding schedules (daily, monthly, quarterly) on an equal basis because it standardizes the return to a one-year period.
How is the maturity date calculated?+
The calculator adds your CD term in months to the start date you provide. When the resulting date falls on an invalid calendar day — for example, adding 1 month to January 31 would give February 31 — the date is adjusted backward to the last valid day of the target month so the maturity date is always correct.
Does this include early withdrawal penalties?+
No. The calculator assumes the CD is held to full maturity and does not subtract any early withdrawal penalties, which vary by bank and typically range from 3 to 12 months of interest. It also does not account for taxes on interest income, which you would report on your annual tax return.
What is the difference between APY and APR?+
APY (annual percentage yield) includes the effect of compounding and shows what you actually earn, while APR (annual percentage rate) is a simple rate that does not include compounding. For savings products like CDs, APY is always the more useful number because it reflects the true return.
How do CD rates compare to savings accounts?+
CDs typically offer higher APYs than regular savings accounts because you agree to lock up your money for a fixed term. High-yield savings accounts offer more flexibility to withdraw at any time but usually pay lower rates. Online banks often offer competitive rates in both categories.
What happens if I withdraw early?+
Early withdrawal triggers a penalty that varies by bank and term length. Common penalties range from 3 months of interest for short-term CDs to 12 months of interest for long-term CDs. Some banks offer no-penalty CDs that allow early withdrawal without a fee, though they typically pay a lower APY.
How is CD interest taxed?+
CD interest is taxed as ordinary income at your marginal federal income tax rate, plus any applicable state and local taxes. You will receive a 1099-INT form from the bank if the interest earned exceeds $10 in a tax year. The calculator does not model tax implications.