CD Calculator: How to Calculate CD Interest

How to calculate CD interest

Interest = Deposit × (1 + APY)months / 12 − Deposit

Example: a $10,000 CD at 4% APY for 12 months is worth $10,400.00 at maturity, so it earns $400.00 in interest. For 6 months: $198.04; for 5 years: $2,166.53.

Today: the best high-yield savings accounts paid about 4.4% APY in late October 2026; top CD rates are in the same range. These are examples, not advice.

This CD interest calculator works with APY or with the interest rate. A certificate of deposit (CD) pays a fixed rate for a fixed term. Enter how much you deposit, the APY the bank quotes and the term in months to see what the CD is worth at maturity and how much interest it earns. If your bank quotes an interest rate (APR) instead, switch the rate type and pick how often it compounds.

Balance at maturity
$10,450.00
Interest earned
$450.00
APY
4.5%
Average interest per month
$37.50

Assumes the interest stays in the CD until maturity and no early-withdrawal penalty applies. Interest is usually taxable in the year it is credited. Results are estimates, not financial advice.

The CD formula

Balance at maturity = Deposit × (1 + APY)months / 12. Interest earned is the balance minus the deposit. If you only know the interest rate r and the compounding frequency n, first convert it: APY = (1 + r / n)n − 1.

Example with steps: $15,000 CD at 3% compounded daily for 5 years

A common homework question: a CD opens with a $15,000 deposit at a 3% interest rate compounded daily. What is the balance and the interest after five years?

  1. Formula: A = P × (1 + r / n)n × t, with P = $15,000, r = 0.03, n = 365 compounding periods a year and t = 5 years.
  2. Rate per day: r / n = 0.03 / 365 = 0.00008219.
  3. Number of periods: n × t = 365 × 5 = 1,825.
  4. Growth factor: (1 + 0.00008219)1,825 = 1.16183.
  5. Balance: A = $15,000 × 1.16183 = $17,427.41.
  6. Interest earned: $17,427.41 − $15,000 = $2,427.41.

Interest rate versus APY: a 3% rate compounded daily is an APY of (1 + 0.03 / 365)365 − 1 = 3.045%. The APY is slightly higher because interest earns interest during the year. With the APY the same balance is $15,000 × (1 + 3.045%)5 = $17,427.41. To try it in the calculator above, choose the interest rate (APR) type, set daily compounding, 3%, $15,000 and 60 months.

Example: $10,000 CD at 4.5% APY

TermBalance at maturityInterest earned
3 months$10,110.65$110.65
6 months$10,222.52$222.52
12 months$10,450.00$450.00
18 months$10,682.54$682.54
24 months$10,920.25$920.25
36 months$11,411.66$1,411.66
60 months$12,461.82$2,461.82

A 4.5% APY corresponds to an interest rate of about 4.402% compounded daily, or 4.41% compounded monthly.

Interest on a $10,000 CD by APY and term

APY6 months1 year2 years5 years
3%$148.89$300.00$609.00$1,592.74
4%$198.04$400.00$816.00$2,166.53
4.5%$222.52$450.00$920.25$2,461.82
5%$246.95$500.00$1,025.00$2,762.82

How to compare CDs

Compare by APY rather than by rate, check the term matches when you will need the money, and look at the early-withdrawal penalty. If you might need part of the money sooner, a CD ladder (splitting the deposit across 1-, 2- and 3-year CDs) or a high-yield savings account keeps more of it within reach.

Frequently asked questions

How do you calculate CD interest step by step?

Write the APY as a decimal (4% = 0.04), add 1, raise it to the power months ÷ 12, multiply by the deposit, then subtract the deposit. For $10,000 at 4% APY for 12 months: 10,000 × 1.04 − 10,000 = $400. For 6 months: 10,000 × 1.04^0.5 − 10,000 ≈ $198.

How is CD interest calculated?

With the APY, the balance at maturity is Deposit × (1 + APY)^(months / 12). With an interest rate r compounded n times a year, it is Deposit × (1 + r / n)^(n × years). A $10,000 one-year CD at 4.5% APY is worth $10,450 at maturity.

What is the difference between a CD rate and a CD APY?

The rate (APR) is the interest rate before compounding; the APY includes compounding over a year. A 4.4% rate compounded daily is an APY of about 4.498%. Compare CDs by APY, because it already accounts for how often interest compounds.

Does compounding frequency matter for a CD?

Only when you start from the interest rate. If the bank quotes an APY, compounding is already built in, so a daily-compounded and a monthly-compounded CD with the same APY earn the same amount over a full year.

How much does a $10,000 CD earn in a year?

At 4% APY it earns $400, at 4.5% APY $450 and at 5% APY $500 over 12 months, as long as the interest stays in the CD until maturity.

What happens if I withdraw money from a CD early?

Most banks charge an early-withdrawal penalty, commonly a few months of interest (for example 3 months of interest on a 1-year CD). The penalty can reduce your return below what this calculator shows, and on short terms it can take some of your principal.

Is CD interest taxable?

In the US, CD interest is taxed as ordinary income in the year it is credited to your account, even if you do not withdraw it until maturity. CDs held inside an IRA follow the IRA rules instead.

Sources

Last reviewed by the Quick Compound Interest Calculator team. Results are estimates for education, not financial advice.