CD Calculator
With amount deposited 10000 usd, apy 4.25 percent, term 12 months, early withdrawal penalty 3 months of interest and 1 more field, cd comes to $10,425.00 — value at maturity. It is reached in 7 steps, the last of which is 10000 * pow(1 + 4.25 / 100, 1), and each one is printed on the page with its numbers filled in. The formula is the one published by 12 CFR part 1030 (Regulation DD), not an approximation fitted to it.
What a certificate of deposit is worth at maturity, and what breaking it early costs. Includes the early-withdrawal penalty and the after-tax yield.
Formula and sources checked · How we check
Amount deposited 10000, APY 4.25, Term 12 months, Early withdrawal penalty 3 months of interest
$10,425.00
Value at maturity for the example below. Editing a field recomputes the calculator below; this figure holds the answer the page was loaded with.
It is written into the HTML rather than drawn by a script, so a search engine reading this page without running JavaScript still finds an answer.
- Value at maturity
10000 * pow(1 + 4.25 / 100, 1)$10,425- Interest earned
10425 - 10000$425- Interest in an average month
425 / 12$35.42- Early withdrawal penalty
35.416667 * 3$106.25- Tax on the interest
425 * 22 / 100$93.50- Interest after tax
425 - 93.5$331.50- After-tax yield
4.25 * (1 - 22 / 100)3.315 %
Worked example
$10,000 in a one-year CD at 4.25% APY matures at $10,425. Breaking it early costs three months of interest — about $106 — and the $425 of interest is taxable as ordinary income, leaving $331.50 after a 22% bracket.
How to work it out yourself
- 1.Use the APY the bank advertises, not the interest rate. APY already includes the compounding, and Regulation DD requires banks to quote it, precisely so that two offers can be compared in one number.
- 2.Check the early withdrawal penalty before committing. It is quoted in months of interest, and on a long CD taken out early it can exceed the interest actually earned.
- 3.Remember the tax: CD interest is ordinary income in the year it is credited, even on a multi-year CD you have not touched.
What a term does to the same deposit
| Term (months) | Value at maturity | Interest earned | Early withdrawal penalty |
|---|---|---|---|
| 3 | $10,104.60 | $105 | $105 |
| 6 | $10,210.29 | $210 | $105 |
| 9 | $10,317.09 | $317 | $106 |
| 12 | $10,425.00 | $425 | $106 |
| 18 | $10,644.23 | $644 | $107 |
| 24 | $10,868.06 | $868 | $109 |
| 36 | $11,329.96 | $1,330 | $111 |
| 48 | $11,811.48 | $1,811 | $113 |
| 60 | $12,313.47 | $2,313 | $116 |
$10,000 at 4.25% APY, with a three-month penalty.
The formula
- Value at maturity
10000 * pow(1 + 4.25 / 100, 1) - Interest earned
10425 - 10000 - Interest in an average month
425 / 12 - Early withdrawal penalty
35.416667 * 3 - Tax on the interest
425 * 22 / 100 - Interest after tax
425 - 93.5 - After-tax yield
4.25 * (1 - 22 / 100)
Source: 12 CFR part 1030 (Regulation DD) — Truth in Savings, including the annual percentage yield formula, FDIC — deposit insurance coverage
Questions people actually ask
- What is the difference between APY and interest rate?
- The interest rate is what is applied each period; the APY is what a year of that compounding actually yields. A 4.17% rate compounded monthly is a 4.25% APY. Regulation DD requires the APY to be disclosed so offers with different compounding schedules can be compared, and it is the number to use in any calculation.
- What happens if I take the money out early?
- You pay a penalty in months of interest — commonly three on a short CD and six to twelve on a long one. On a CD broken in its first few months the penalty can be larger than the interest earned, in which case the bank takes it out of the principal. Some banks now offer no-penalty CDs at a slightly lower rate for exactly this reason.
- Is a CD safe?
- Deposits at an FDIC-insured bank are covered to $250,000 per depositor per bank per ownership category, and credit unions have the equivalent through the NCUA. Above that limit the excess is not insured, which is why large deposits are usually split across institutions.
- Is a CD better than a savings account?
- It pays more for giving up access. The trade is worth taking when you know the money is not needed before the term ends and when rates are expected to fall — a CD locks the rate in. When rates are rising, a high-yield savings account that follows them can end up ahead, and it never charges you to withdraw.
Related
- APY CalculatorAnnual percentage yield from a rate and its compounding frequency, and what it earns on a balance in dollars.
- Savings Goal CalculatorThe monthly contribution needed to reach a target by a date, given what you have saved already.
- Compound Interest CalculatorFuture value of a starting balance plus monthly contributions, separating what you put in from what the interest earned.
- ROI CalculatorReturn on investment as a total percentage and as an annualised rate, so holdings of different lengths compare fairly.
- Interest CalculatorWhat a balance grows to under simple and compound interest, with the gap between the two shown as its own figure.
- Investment CalculatorWhat regular contributions grow to over time, with the inflation-adjusted figure beside the nominal one.
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