CD Calculator

The interest rate (sometimes called the nominal or stated rate) is the rate before compounding is applied. APY (annual percentage yield) already factors in compounding, so it's the actual percentage your balance grows by in a year — APY is always equal to or higher than the interest rate. Banks are required to advertise APY so CDs can be compared on equal footing; a 5% rate compounded monthly works out to a 5.116% APY.

CD interest is taxed as ordinary income in the year it's credited to your account, even if you don't withdraw it or the CD hasn't matured yet. Your bank sends you (and the IRS) a Form 1099-INT for any account that earns $10 or more in interest during the year. There's no special lower rate for CD interest the way there is for long-term capital gains.

Most banks let you withdraw early but charge an early withdrawal penalty, typically a set number of months of interest on your deposit. If you haven't earned enough interest yet to cover the penalty, the penalty comes out of your principal, so you can end up with less than you deposited. Some banks offer "no-penalty CDs" with a lower rate in exchange for that flexibility.

It depends on how early you withdraw and how the penalty is set. On a 12-month, $10,000 CD at 4.5% APY with a typical 3-month penalty, withdrawing after 1 month earns about $36.75 in interest but costs a $110.05 penalty — a $73.30 loss versus your deposit. Withdraw later in the term, once you've earned more interest, and the same penalty is more likely to just eat into your gains instead of your principal.

A CD ladder splits your money across several CDs with staggered maturity dates — for example, CDs maturing in 3, 6, 9, and 12 months — instead of locking it all into one term. As each CD matures you can spend the cash, or reinvest it into a new long-term CD at whatever the going rate is. It trades a bit of yield (shorter CDs often pay less than longer ones) for regular access to part of your money without an early withdrawal penalty.

A bank CD is opened directly with a bank or credit union and is FDIC- or NCUA-insured the same way a savings account is. A brokered CD is bought through a brokerage account but issued by a bank, so it's still eligible for FDIC insurance up to the limit, per issuing bank. Brokered CDs often offer more term choices, including terms well beyond 5 years, and can be sold on the secondary market before maturity — but that sale price isn't guaranteed and can be below what you paid if rates have risen since you bought it, unlike a bank CD's fixed early withdrawal penalty.

CDs at FDIC-member banks are insured up to $250,000 per depositor, per insured bank, per ownership category (for example, single accounts and joint accounts are tracked separately). Credit unions carry equivalent NCUA insurance. If you're depositing more than $250,000, spreading it across ownership categories or multiple insured institutions keeps the full amount covered.

No. APY is defined to already include the effect of compounding, so once you have the APY, the compounding frequency doesn't change your result — this calculator's compounding field only matters when you enter a plain interest rate and need it converted to an APY.

CD rates move with the broader interest rate environment and vary by term and institution — online banks and credit unions often pay more than large national banks. There's no fixed "good" number; compare the APY offered across a few institutions for the term you want, and weigh a higher rate against the early withdrawal penalty if there's a chance you'll need the money sooner.

Usually not — a standard CD is a single lump-sum deposit for a fixed term, and you can't add funds until it matures. An "add-on CD" is a specific product some banks offer that allows additional deposits during the term; if you want to keep contributing regularly, a high-yield savings account or money market account is usually a better fit than a CD.