CD Interest Calculator
Project maturity value for a certificate of deposit, compare terms, and check the cost of breaking it early.
Your details
Details
CD interest is taxed as ordinary income
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
Value at maturity
$26,062.50
$1,062.50 of interest over 12 months
Includes your inputs, the full breakdown, and every row of the table.
Interest earned
$1,062.50
After tax
$828.75
Nominal rate
4.169%
Early withdrawal cost
$265.63
- Deposit
- $25,000.00
- APY
- 4.25%
- Term
- 12 months
- Interest
- + $1,062.50
- Tax at 22%
- - $233.75
- Net after tax
- $25,828.75
| Term | Maturity value | Interest | Annualised |
|---|---|---|---|
| 3 months | $25,261.49 | $261.49 | 4.18% |
| 6 months | $25,525.72 | $525.72 | 4.21% |
| 12 months | $26,062.50 | $1,062.50 | 4.25% |
| 24 months | $27,170.16 | $2,170.16 | 4.34% |
| 36 months | $28,324.89 | $3,324.89 | 4.43% |
| 60 months | $30,783.67 | $5,783.67 | 4.63% |
What this means
- APY already includes the effect of compounding, which is why it is the number to compare between banks. The nominal rate shown here is what would produce this APY at your chosen frequency.
- CD interest is taxed as ordinary income in the year it is credited, not when the CD matures. On multi-year CDs you may owe tax on interest you cannot yet access.
- Breaking this CD early would cost about $265.63. Some banks can take more than you have earned, leaving you with less than you deposited.
How the cd interest calculation works
A certificate of deposit trades liquidity for a guaranteed rate. You commit money for a defined term and the bank fixes the yield, which is valuable when rates are falling and costly when they are rising. The quoted figure is almost always an annual percentage yield, which has compounding already baked in — that is deliberate, because it makes offers directly comparable regardless of whether the bank compounds daily, monthly or quarterly.
Two details determine whether a CD is actually a good deal. The first is the early withdrawal penalty, typically expressed as a number of months of interest, which can exceed what you have earned on a short-held CD and eat into principal. The second is tax treatment: interest is ordinary income, taxed at your marginal rate in the year it is credited, so a headline yield of four percent is closer to three after tax for most earners. Comparing a CD against tax-advantaged or tax-exempt alternatives without adjusting for that is not a fair comparison.
Frequently asked questions
What is the difference between APY and interest rate?
The interest rate is the nominal figure before compounding; APY is what you actually earn once compounding is included. A 4.00% rate compounded daily produces about 4.08% APY. Banks advertise APY precisely so that offers with different compounding schedules can be compared directly.
What happens if I need the money early?
You pay a penalty, usually stated as a number of months of interest — commonly three months on a one-year CD and six or more on longer terms. If you withdraw soon after opening, the penalty can exceed the interest earned and reduce your principal. A few no-penalty CDs exist at slightly lower rates.
Is a CD ladder worth the effort?
Often, yes. Splitting the money across staggered maturities means part of it becomes available regularly while the rest still earns longer-term rates. It reduces the risk of locking everything in just before rates rise, and it means an unexpected expense rarely forces you to break a CD.
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Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.