Certificate of Deposit (CD) Calculator

Calculate the future value and interest earned on your Certificate of Deposit investment.

Calculator

Enter Your CD Details

Enter the amount you want to invest in the CD.

Enter the annual interest rate offered by the CD.

Enter the length of the CD term in years.

Select how often the interest is compounded.

Table of Contents

1 CD Formula
2 How to Calculate CD Returns
3 Understanding Compounding
4 CD - Practical Examples
Concept

CD Formula

The future value of a CD is calculated using the compound interest formula, which takes into account the initial deposit, interest rate, term length, and compounding frequency.

Formula:
FV = P × (1 + r/n)^(n×t)

Where:

  • FV = Future Value
  • P = Principal (Initial Deposit)
  • r = Annual Interest Rate (as a decimal)
  • n = Number of times interest is compounded per year
  • t = Time in years
Steps

How to Calculate CD Returns

To calculate CD returns, follow these steps:

  1. 1
    Determine your initial deposit amount
  2. 2
    Find the annual interest rate offered by the CD
  3. 3
    Choose the term length for your CD
  4. 4
    Select the compounding frequency
  5. 5
    Use the compound interest formula to calculate the future value
  6. 6
    Subtract the initial deposit to find the interest earned
Analysis

Understanding Compounding

What is Compounding?

Compounding is the process where interest is earned on both the initial deposit and the accumulated interest from previous periods.

Compounding Frequency

The more frequently interest is compounded, the higher your returns will be. Common frequencies include annually, semi-annually, quarterly, monthly, and daily.

Impact on Returns

Higher compounding frequencies lead to higher effective annual yields, though the difference becomes less significant as the frequency increases.

Examples

CD - Practical Examples

Example 1 Basic CD

Initial Deposit: $10,000
Annual Interest Rate: 5%
Term Length: 5 years
Compounding: Annually

FV = $10,000 × (1 + 0.05/1)^(1×5) = $12,762.82

Example 2 Monthly Compounding

Initial Deposit: $10,000
Annual Interest Rate: 5%
Term Length: 5 years
Compounding: Monthly

FV = $10,000 × (1 + 0.05/12)^(12×5) = $12,833.59

Tools

Financial Calculators

Apy Future Value Cd Compound Interest College Value

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