CD Calculator
Estimate returns on your CD account or certificate of deposit — across every term, all at once.
Your Earnings at a Glance
E*TRADE (Morgan Stanley) — 6-month to 5-year CDs. $0 minimum. Rates as of 7/21/2026.
| TermTerm | Total InterestInterest | Ending BalanceBalance | Effective ReturnReturn |
|---|
Work Backwards From Your Goal
What Is a CD Account?
A Certificate of Deposit (CD) is a type of savings account offered by banks and credit unions. You agree to leave your money in the account for a fixed period — anywhere from 3 months to 20 years — and in return, the bank pays you a fixed, guaranteed interest rate that is typically far higher than a regular savings account.
CDs are FDIC insured up to $250,000 per depositor, per bank. Your principal is protected even if the bank fails. This makes CDs one of the safest ways to earn meaningful interest on cash you don’t need immediately.
CD vs Savings Account
| Feature | CD Account | Savings Account |
|---|---|---|
| Interest Rate | 4.00–5.50% APY | 0.01–4.50% APY |
| Access to Money | Locked until maturity (penalty for early withdrawal) | Withdraw anytime (usually 6×/month limit) |
| Rate Type | Fixed for the entire term | Variable — can change at any time |
| Minimum Deposit | $0–$2,500 depending on the bank | Typically $0 |
| FDIC Insurance | Yes, up to $250,000 | Yes, up to $250,000 |
| Best For | Money you won’t need until a specific date | Emergency fund and everyday cash |
Current CD Rates by Term
Approximate market rates as of July 2025. Use the calculator above with your actual bank’s rate for a precise estimate.
| Term | Typical APY | $10,000 at Maturity |
|---|---|---|
| 3 Months | 4.10% | $10,102 |
| 6 Months | 4.85% | $10,242 |
| 1 Year | 5.00% | $10,500 |
| 2 Years | 4.30% | $10,898 |
| 3 Years | 4.20% | $11,314 |
| 5 Years | 4.10% | $12,226 |
| 10 Years | 3.85% | $14,692 |
How CD Interest Is Calculated
The standard compound interest formula for a Certificate of Deposit is:
FV = P × (1 + r/n)n⋅t + PMT × (1 + r/n)n⋅t − 1⁄r/n
Where P = initial deposit, r = annual interest rate (decimal), n = compounding periods per year (12 for monthly, 365 for daily), t = term in years, and PMT = any periodic additional contributions.
Worked Example
Suppose you deposit $10,000 into a CD with a 5% annual rate, compounded monthly, for a 3-year term.
r = 0.05 n = 12 t = 3
A = (1 + 0.05/12)12×3 = (1.004167)36 = 1.16147
FV = $10,000 × 1.16147 = $11,614.72
Total interest earned = $11,614.72 − $10,000 = $1,614.72
Effective APY = (1 + 0.05/12)12 − 1 = 5.116%
Notice the APY (5.116%) is slightly higher than the stated rate (5.00%) because monthly compounding reinvests interest throughout the year — a concept known as compound interest.
CD Strategies
CD Ladder
Spread your money across CDs with staggered maturities — for example, 1, 2, 3, 4, and 5-year terms. When the 1-year matures, reinvest it into a new 5-year CD. Repeat each year. The result: you eventually have a 5-year CD maturing every single year, giving you both higher long-term rates and annual access to your money without penalty.
Bump-Up CD
Some banks offer a “bump-up” feature that lets you raise your rate once during the term if market rates increase. These typically start with a slightly lower initial rate than a standard CD, but protect you if rates climb after you lock in.
No-Penalty CD
A no-penalty CD can be withdrawn at any time without paying an early withdrawal fee. The tradeoff: the rate is lower than a standard CD with the same term. Useful if you want higher yield than a savings account but aren’t certain you can leave the money untouched.
Brokered CDs
Sold through brokerages like Fidelity or Schwab, brokered CDs offer a wider selection of rates and terms from multiple banks. They can be traded on a secondary market, meaning their value fluctuates with interest rate changes — unlike a bank CD, which is simply held to maturity.
What to Watch Out For
Early Withdrawal Penalty
If you withdraw before the CD matures, most banks charge a penalty. Typical penalties: 3 months of interest for terms under 1 year, 6 months for 1–5 year terms, and 12 months for 5+ year terms. Use our penalty calculator above to see exactly what you’d lose.
Inflation Risk
A CD earning 5% with 3% inflation has a real return of only ~2%. Over long periods, inflation can erode your purchasing power even though your balance grows. CDs are safe, but they are not a hedge against inflation.
Tax on CD Interest
CD interest is taxed as ordinary income at your marginal federal rate — and in most cases, your state rate too. Interest is taxable in the year it is credited to your account, even if you don’t withdraw it. CDs held in an IRA or 401(k) defer this tax until withdrawal. Use the After-Tax Earnings section above to estimate your actual take-home return.
FDIC Insurance Limits
Each depositor is insured up to $250,000 per bank, per ownership category. If you hold more than $250,000 in CDs at a single bank, split the excess across multiple FDIC-insured institutions. Credit union CDs are insured by the NCUA for the same amount.
Automatic Renewal
Most CDs auto-renew at maturity into a new CD of the same term at the bank’s current rate — which may be lower than the original. Banks typically provide a grace period (7–10 days) after maturity to withdraw or change terms without penalty. Set a calendar reminder so you don’t get locked into a lower rate.
Frequently Asked Questions
What is a CD account?
A Certificate of Deposit is a fixed-term savings account that pays a guaranteed interest rate. You lock your money for a set period and earn a higher rate than a regular savings account.
How does a CD account work?
You deposit money for a set term. The bank pays a fixed APY. At maturity, you receive your principal plus all accrued interest. Withdrawing early usually triggers a penalty of several months’ interest.
What is the difference between a CD and a savings account?
A CD locks your money at a guaranteed rate for a fixed term. A savings account lets you withdraw anytime, but the rate is typically much lower and can change at any time.
What is APY? How is it different from the interest rate?
APY (Annual Percentage Yield) includes the effect of compounding. The interest rate does not. For example, a 5% interest rate compounded monthly yields ~5.12% APY. Always compare APY — it tells you what you actually earn.
Are CDs FDIC insured?
Yes. CDs from FDIC-insured banks are protected up to $250,000 per depositor, per bank. NCUA insures credit union CDs for the same amount.
Is a CD a good investment right now?
CDs are a good fit if you have cash you won’t need for a set period and want a guaranteed, risk-free return. They are not ideal for money you might need on short notice, or for growth that outpaces inflation over decades. Compare CD rates to high-yield savings accounts and Treasury bonds to find the best option for your timeline.
What is the minimum deposit for a CD?
Minimum deposits vary by bank. Many online banks and credit unions offer CDs with no minimum or as little as $500. Traditional banks may require $1,000–$2,500. Jumbo CDs, which offer higher rates, typically require $100,000 or more. Always check the specific bank’s requirements before opening an account.
How is CD interest taxed?
CD interest is taxed as ordinary income at your federal marginal tax rate, plus state income tax where applicable. Interest is taxable in the year it is credited to your account — even if you leave it in the CD. For an estimate of your after-tax return, use the After-Tax Earnings calculator on this page.