Certificate of Deposit (CD) Calculator
Calculate Certificate of Deposit returns with compound or simple interest. Compare different CD terms, rates, and see year-by-year growth projections.
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Investment Analysis
Important Assumptions
This calculator assumes consistent interest rates throughout the CD term.
No early withdrawal penalties, and no additional deposits or withdrawals.
Actual CD returns may vary due to rate changes, fees, and bank-specific terms.
Frequently Asked Questions
What is a Certificate of Deposit (CD)?
A Certificate of Deposit is a time deposit offered by banks with a fixed interest rate and maturity date. CDs typically offer higher interest rates than regular savings accounts in exchange for keeping your money locked up for a specified period.
What's the difference between simple and compound interest?
Simple interest is calculated only on the principal amount, while compound interest is calculated on the principal plus accumulated interest. Compound interest typically provides higher returns over time due to the "interest on interest" effect.
How does compounding frequency affect returns?
More frequent compounding (daily vs. annually) generally results in higher returns. However, the difference becomes smaller as the compounding frequency increases. Most CDs compound either monthly or quarterly.
What are CD early withdrawal penalties?
Most CDs charge penalties for early withdrawal, typically 3-6 months of interest. This calculator doesn't account for early withdrawal penalties, so actual returns may be lower if you need to access your money before maturity.
Are CD returns guaranteed?
CD returns are generally guaranteed by the bank up to FDIC insurance limits ($250,000 per depositor, per bank). However, the purchasing power of your returns may decrease due to inflation over time.
How accurate is this CD calculator?
The calculator uses standard compound and simple interest formulas and provides mathematically accurate projections. However, actual returns may vary due to bank fees, rate changes, and other factors not accounted for in this calculation.