CD Calculator

The short answer

• $10,000 in a 12-month CD at 4.00% APY earns $400.00. After 22% tax you keep $312.00.
• The FDIC’s national average 12-month CD paid about 1.73% in September 2026, so shopping around matters.
• Cashing in early usually costs a set number of months of interest, and can eat into your deposit.
• Deposits are insured up to $250,000 per depositor, per bank or credit union, per ownership category.

What a CD is

A CD is a time deposit at a bank or credit union (where it may be called a share certificate). You deposit a lump sum, the rate is fixed for the term, and at maturity you get your money back with interest. In exchange for the higher, guaranteed rate, you agree not to take the money out early, or to pay a penalty if you do.

Terms usually run from three months to five years. Most CDs take a single deposit; you cannot add to them after opening, unlike a savings account.

A worked example

A 5-year CD at 3.80% APY turns $10,000 into $12,049.99, earning $2,050. Use the calculator for your own deposit, rate and term.

APY and the interest rate

Banks quote two figures. The interest rate is the yearly rate before compounding. The annual percentage yield (APY) includes the effect of compounding, so it is what you actually earn in a year. Federal Truth in Savings rules require banks to show the APY, which makes it the right figure for comparing CDs.

The calculator takes either. Choose "APY" if your bank quotes APY (most do); choose "Interest rate before compounding" if you only have the nominal rate.

How often interest compounds

More frequent compounding helps a little. Comparing APYs already accounts for it, so you do not need to adjust.

What CDs pay in 2026

The averages are pulled down by large banks that pay very little. Online banks and credit unions often pay several times the national average, so compare offers. On $10,000 for a year, the average 12-month CD earns about $173, against $400 at 4%.

Choosing a term

Longer terms usually pay more, but not always: in September 2026 the average 12-month CD paid more than the 5-year one, a sign that banks expected rates to fall. Match the term to when you need the money: a house deposit in 18 months, tuition next fall, or a cash reserve you want to keep earning.

Early withdrawal penalties

Each bank sets its own penalty in the account agreement, usually as months or days of interest. There is no legal maximum. Typical rules:

Federal rules set a minimum: money withdrawn within six days of the deposit must pay at least seven days’ simple interest, even on a no-penalty CD. If the penalty is more than the interest earned so far, the rest comes out of your deposit.

What cashing in early costs

The example is $10,000in an 18-month CD at 4.00% APY with a penalty of six months of simple interest. Cashing in after two months loses about $131 of the original deposit. Turn on "Cash in the CD early" under More options to see your own figures.

Building a CD ladder

A CD ladder spreads your money across CDs that mature at different times, so some cash is always coming free and you still earn long-term rates on most of it.

1. TodaySplit $25,000 into five $5,000 CDs

   Terms of 1, 2, 3, 4 and 5 years.

2. Year 1The 1-year CD matures

   Reinvest it in a new 5-year CD, or use the cash.

3. Years 2 to 4One CD matures each year

   Each is rolled into a new 5-year CD.

4. Year 5 onA full ladder

   Every rung earns a 5-year rate, and one matures every year.

A shorter ladder, such as 3-, 6-, 9- and 12-month CDs, works for money you may need within a year. Ladders also smooth out changes in rates, because you reinvest a little at a time.

CDs vs high-yield savings

A high-yield savings account is better for an emergency fund you might need at short notice. A CD is better for money with a known date when you want to lock in today’s rate. The average savings account paid about 0.37% in September 2026, which earns just $37 a year on $10,000. The savings goal calculator shows how fast regular deposits reach a target.

CDs vs Treasury bills

Treasury bills, sold through TreasuryDirect or a brokerage, are backed by the US government and run from 4 to 52 weeks. Their interest is exempt from state and local income tax, which can make them pay more after tax than a CD at the same rate if you live in a high-tax state. Selling one before maturity is possible at a brokerage, but the price can be higher or lower than you paid.

Other kinds of CD

• No-penalty CDs let you withdraw after the first week without a penalty, usually at a slightly lower rate.
• Bump-up CDs let you raise the rate once or twice if the bank’s rates rise.
• Jumbo CDs need a large deposit, often $100,000, and may pay a little more.
• Brokered CDs are bought through a brokerage and can be sold before maturity, at the market price.
• Callable CDs can be ended early by the bank, usually when rates fall, which removes the rate you locked in.

FDIC and NCUA insurance

CDs at FDIC-insured banks and NCUA-insured credit unions are covered up to $250,000 per depositor, per insured institution, for each ownership category, such as single, joint and retirement accounts. Interest counts toward the limit. If you have more, spread it across banks or ownership categories. Brokered CDs are insured too, as long as the issuing bank is FDIC-insured and the limits are respected.

Tax on CD interest

CD interest is taxed as ordinary income at your federal rate and usually your state rate. It is taxed in the year it is credited to the CD, even if you do not withdraw it, so a multi-year CD can create a tax bill each year. Your bank sends Form 1099-INT. An early withdrawal penalty can be deducted on your return. The tax bracket calculator shows your marginal rate.

CDs in an IRA

You can hold CDs inside a traditional or Roth IRA. The interest then grows tax-deferred or tax-free, but IRA withdrawal rules apply on top of the bank’s penalty. The Roth IRA calculator shows the 2026 limits.

When your CD matures

Banks send a notice before maturity. Many CDs renew automatically into a new CD of the same term at whatever rate the bank then pays, which may be low. There is usually a grace period, often 7 to 10 days, to withdraw or move the money without a penalty. Put the date in your calendar.

CDs and inflation

A CD protects your dollars but not their buying power. If inflation runs above your after-tax rate, the money loses value in real terms. For goals many years away, the compound interest calculator lets you compare other rates of growth.

Common mistakes

• Comparing interest rates instead of APYs.
• Locking up your emergency fund in a long CD.
• Letting a CD renew automatically at a low rate.
• Not reading the penalty rule before opening.
• Going over the $250,000 insurance limit at one bank in one ownership category.

How the interest is paid

Most CDs add interest to the CD itself, so it compounds, and you receive it all at maturity. Some let you have interest paid out monthly or quarterly to a checking or savings account instead, which suits people living on the income. Paid-out interest does not compound, so the CD earns a little less than its APY suggests. The calculator assumes interest stays in the CD.

How to open a CD

1. Decide how much you can lock away and for how long, keeping an emergency fund in an account you can reach.
2. Compare APYs at online banks, credit unions and your own bank, for the same term.
3. Read the early withdrawal penalty, the minimum deposit and what happens at maturity.
4. Check the bank is FDIC-insured or the credit union NCUA-insured.
5. Fund the CD by transfer and note the maturity date in your calendar.

Why CD rates change

CD rates follow the interest rates set in markets, which in turn follow the Federal Reserve’s policy rate and expectations about it. When the Fed raises rates, new CDs usually pay more; when markets expect cuts, longer CDs often pay less than shorter ones, as they did in 2026. Banks also raise rates when they want deposits, which is why online banks and credit unions often lead.

When breaking a CD can pay

If rates rise a lot after you open a CD, cashing in and reopening at a higher rate can come out ahead, even after the penalty. Compare the interest you would earn on the rest of your current CD with what a new CD would earn over the same months, less the penalty. With a penalty of several months’ interest, the new rate usually has to be well above the old one, and the gain is small on short remaining terms. Turn on "Cash in the CD early" to see the penalty in dollars.

Joint accounts and beneficiaries

Insurance limits apply per ownership category, so a married couple can be covered for more than $250,000 at one bank. A joint account is insured up to $250,000 for each co-owner, and accounts with named beneficiaries, such as payable-on-death accounts, have their own coverage rules. The FDIC’s online estimator works out your exact coverage.

Good uses for a CD

• A house down payment you plan to make in one to three years.
• Money set aside for tuition, a wedding or a car.
• Part of a retiree’s cash reserve, laddered so some matures each year.
• Cash beyond your emergency fund that you want to keep safe but earning.

For money you will not need for many years, stocks and bonds have historically grown faster, though with ups and downs.

Credit union share certificates

Credit unions call their CDs share certificates. They work the same way, are insured by the NCUA up to the same $250,000 limit, and often pay competitive rates. You usually need to become a member first, which may depend on where you live or work, or on a small donation to a partner charity. Compare their APYs and penalties just as you would a bank’s.

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