Certificate of Deposit Calculator
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The Certificate of Deposit (CD) Calculator helps you estimate how much your money will grow when invested in a CD. By entering your deposit amount, interest rate, compounding frequency, and term length, you get a clear picture of your final balance and earned interest.
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Read MoreA CD is a fixed-term, low-risk investment where you deposit a sum of money for a set period, typically from a few months up to several years. During this time, your deposit earns interest at a rate promised by the institution.
CDs offer higher interest rates than regular savings accounts but require you to lock in your money until maturity, or risk penalties for early withdrawal.
Interest on CDs is compounded at regular intervals—daily, monthly, quarterly, or yearly—which affects how quickly your investment grows.
The basic formula behind the calculator uses compound interest:
A = P × (1 + r/n)^(nt)
where A is the amount accumulated, P is the principal, r is annual interest rate (decimal), n is number of compounding periods per year, and t is time in years.
For example, a $10,000 CD at 5% interest compounded annually over 3 years will grow to about $11,576.25.
It's important to consider taxes on your CD earnings unless held in tax-advantaged accounts like IRAs.
CDs are FDIC-insured up to $250,000 per depositor per bank, ensuring safety of your investment even if the bank faces difficulties.
Strategies like CD laddering allow you to maintain liquidity by staggering multiple CDs with different maturity dates to balance access to funds and higher yields.
Choosing the right CD depends on your financial goals, risk tolerance, and need for liquidity.
This CD Calculator simplifies planning by letting you experiment with various terms and rates, helping you make informed investment decisions.
Whether saving for education, a home, or retirement, CDs provide a reliable way to grow your savings with predictable returns.