Savings · certificate of deposit
Enter a deposit, the APY your bank quotes and how long you'll lock it up. See exactly what the CD is worth at maturity, how much is interest — and how the same money would mature across every standard term, so you can plan a ladder.
The CD ladder
Your deposit matured at every standard term, all at your APY
| Term | Value at maturity | Interest earned | Total return |
|---|
A ladder splits your cash across these terms so a rung matures every so often — you keep access to some money while the longer rungs earn more.
A certificate of deposit is a deal between you and a bank: you agree to leave a lump sum untouched for a fixed term — three months, a year, five years — and in return the bank pays you a guaranteed interest rate that’s usually higher than an ordinary savings account. The trade is liquidity for certainty. Once the CD matures, you get your deposit back plus all the interest it earned. Because the rate is locked the day you open it, a CD is one of the few places where you know the exact dollar figure you’ll walk away with before you ever deposit a cent.
The math is refreshingly simple. Your maturity value is the deposit grown by the quoted yield over the length of the term: value = deposit × (1 + APY)years. The reason there’s no compounding-frequency box on this calculator is that the APY has already done that work — it is the effective annual yield, the number that accounts for however often the bank compounds. Feed in the APY your bank advertises and the term, and the result above is what the CD is worth the day it matures.
Banks quote two rates and they are not the same. The APR, or annual percentage rate, is the plain stated rate before any compounding. The APY, annual percentage yield, is what you actually earn once that interest compounds through the year. A CD with a 4.40% rate that compounds monthly yields about 4.49% — the gap is the compounding. Federal rules require banks to disclose the APY on deposit accounts precisely so savers can compare offers fairly, regardless of how each bank compounds. When you shop CDs, line up the APYs; ignore everything else. That is the figure this tool asks for, and it’s why a single yield input is all the math needs.
The catch with a CD is the lock-up. Pull your money before the maturity date and the bank charges an early-withdrawal penalty — usually a fixed number of months of interest. Short CDs often cost three months’ interest; longer ones can run six months to a full year. On a short-term CD cashed out early, that penalty can erase nearly all the interest you’d earned, and on the unluckiest timing it can even eat into your original deposit. The practical rule is to only put money in a CD if you’re genuinely confident you won’t need it before the term ends. If there’s any real chance you’ll need access, a liquid high-yield savings account is the safer home, even at a slightly lower rate.
A CD ladder is the standard answer to the lock-up problem. Instead of committing your whole balance to one term, you split it into several CDs that mature at staggered dates — say five equal slices in 1-, 2-, 3-, 4- and 5-year CDs. Every year one rung matures, and you either take the cash or roll it into a fresh long-term CD at whatever rate prevails then. The ladder hands you most of the higher yield that long terms pay while still freeing up a portion of your money on a regular schedule, so you’re never fully locked up and never forced to bet everything on where interest rates go next. The ladder table above shows the same deposit matured at each standard term at your entered APY — a quick way to see the trade-off and sketch the rungs you’d want.
A CD isn’t the only home for cash that you want to grow safely, and it isn’t always the best one. A high-yield savings account stays fully liquid — you can move the money any day — but its rate floats and can be cut the moment the market turns. A CD trades that flexibility for a locked, guaranteed rate, which shines when rates are falling and stings when you need the money early. I-Bonds are inflation-linked U.S. Treasury bonds with a different rulebook again: you can’t redeem them for a year, cashing out before five years forfeits three months of interest, and the rate resets with inflation. For an emergency fund, liquidity wins and savings is the answer; for money tied to a known date, a CD or I-Bond often pays more. Our where to park cash tool walks through that decision side by side, and today’s rates shows what each option is paying right now.
A CD is one rung of a wider cash strategy. To see how a deposit grows when you reinvest and add to it over many years, use the compound interest calculator. To decide which account a given pot of money belongs in, run where to park cash, and check today’s rates before you lock anything in. This calculator is an educational tool, not financial advice — confirm the exact APY, term and penalty terms with the bank before you open a CD.
A certificate of deposit grows by its annual percentage yield (APY), which is the effective yearly return after the bank’s compounding is taken into account. The maturity value is simply your deposit multiplied by (1 + APY) raised to the number of years in the term. Because the APY already includes compounding, you don’t need to know whether the bank compounds daily, monthly or quarterly — the yield captures all of it. For a term measured in months, the exponent is the number of months divided by twelve.
APR (annual percentage rate) is the simple stated rate before compounding; APY (annual percentage yield) is what you actually earn once that interest compounds over the year. A CD advertised at a 4.40% rate compounding monthly works out to roughly a 4.49% APY. Banks are required to quote the APY on deposit products, so when you compare CDs, compare APYs — that’s the apples-to-apples number, and it’s the figure this calculator asks for.
A CD locks your money for a fixed term in exchange for a higher, guaranteed rate. If you take the money out before the maturity date, the bank charges an early-withdrawal penalty — typically a set number of months of interest (often three months on shorter CDs and six to twelve months on longer ones). On a short CD pulled early, the penalty can wipe out most or all of the interest you earned, and in some cases dip into principal. Only deposit money you’re confident you won’t need before maturity.
A CD ladder splits your cash across several CDs with staggered maturities — for example equal amounts in 1-, 2-, 3-, 4- and 5-year CDs. Each year one rung matures and you either spend it or roll it into a new long CD. A ladder gives you the higher yields of longer terms while still freeing up a slice of your money every year, so you’re never fully locked up and you’re not forced to guess where rates are heading. The ladder table in this tool shows the same deposit at each standard term so you can see the trade-off.
It depends on access and certainty. A high-yield savings account is fully liquid but its rate can change any day. A CD locks a guaranteed rate for the term, which is great when rates are falling but costly if you need the money early. I-Bonds are inflation-protected U.S. Treasury bonds with their own rules — you can’t touch them for a year, and cashing out before five years costs three months of interest. For an emergency fund, stay liquid; for money with a known timeline, a CD or I-Bond can pay more. Our where-to-park-cash tool walks through the choice.
Yes. Interest earned on a CD is taxed as ordinary income in the year it’s credited, even on a multi-year CD where you don’t receive the cash until maturity — the bank reports it annually on a 1099-INT. That’s different from I-Bonds, where federal tax can be deferred until you redeem them and the interest is exempt from state and local tax. Factor your tax bracket in when comparing after-tax yields across options.
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