August 23, 2021

CD Rates Calculator

Editorial Note: This content is not provided by the companies mentioned. Opinions expressed here are author's alone, and have not been reviewed, approved or otherwise endorsed by the companies.
This article contains references to products from our partners. We may receive compensation if you apply or shop through links in our content. You help support CreditDonkey by reading our website and using our links. (read more)

How much interest will you earn on your CD? Enter a few details to calculate your APY and ending balance.

CD Ladder Calculator

CDs are a conservative and secure way to earn a bit of interest on your savings.

But before you commit to this investment strategy, take a look at how it works and the benefits vs drawbacks.

What is a certificate of deposit?

Certificates of deposit (CDs) keep your cash safe while earning a higher interest rate than a traditional savings account.

However, you must commit to keeping your money "locked up" for a set period of time to get the higher interest rate. Be aware that you could lose money to penalties and fees if you withdraw money early.

Pros:

  • Higher yields than regular savings accounts
  • Guaranteed rate of return
  • CD laddering lets you add long-term stability to portfolio

Cons:

  • Early withdrawal penalties
  • Money is not as liquid as savings accounts
  • Yields might not beat inflation
  • Today's interest rates are lower than the past's

Savings accounts and CDs are often compared, but which should you choose? Learn the difference and which is best for you before stashing your cash.

How do you calculate interest on a CD?

Use this formula to calculate the value of an investment with compound interest:

A = P(1+r/n)(nt)

  • A = the total value of your CD at the end of the term
  • P = the principal amount deposited when you bought the CD
  • R = the annual interest rate in decimal form (ie. If the interest rate is 1.75% APY, r is 0.0175)
  • n = the number of times interest is compounded every year
    Note: Most CD rates are compounded daily (n = 365). But check with your bank to verify the compounding frequency
  • t = the number of years until the maturity date

In this example, you have a $10,000 deposit in a five-year CD at 1.75%, compounded daily.

Here's the calculation:

A = 10,000 (1+0.0175 / 365) ^ (365(5))

With an interest rate of 1.75% compounded daily, you will have $10,914.40 in 5 years.

How much does a CD with $10,000 make in a year?
For this example, imagine you have the following numbers:

  • Deposit amount - $10,000
  • APY - 1%
  • CD term - 12 month
  • Compound frequency - Daily

With an interest rate of 1%, you will have $10,100.50 in 1 year.

Many shrewd savers will invest in CDs with staggered maturity dates. This lets you capitalize on high rates on longer-term CDs and reinvest the money from shorter-term CDs as they mature. Find out how this works below.

Building a CD ladder

With CD ladders, your money is much more available than if you stashed all of it in a long-term CD.

Here's a quick and easy example. If you have $6,000 to invest, you can divide the funds equally into three CDs with different maturity dates:

Step 1: Open the CD

  1. $2,000 into a one-year CD with 0.25 percent APY
  2. $2,000 into a two-year CD with 0.40 percent APY
  3. $2,000 into a three-year CD with 0.55 percent APY

Step 2: Your CD matures

What happens after a CD matures? You have three options:

  1. Withdraw into your bank account
  2. Automatically renew into another CD of the same term (but at the prevailing interest rate, which could be lower or higher than what you had)
  3. Withdraw and choose another CD or another term or at another bank

In CD laddering, you reinvest each CD (and its interest) into a longer-term CD after the maturity date.

There's usually a 1-2 week grace period for you to withdraw funds. If you forget to withdraw, then the bank will automatically renew your CD and your money will be tied up again. So it's important to monitor when your CD matures.

After the first CD matures after one year, you can choose to cash out or reinvest it into another three-year CD that offers a higher yield than a one-year CD. At this point, the other two CDs will be closer to their maturity dates. Just continue this process as long as you wish to maintain the CD ladder.

Note, you don't need to open all of your CDs with one financial institution. Keep an eye out for the best rates on each CD term.

CDs used to be a lot more popular back in the day. But now interest rates are pretty darn low. The biggest drawback to CD laddering is that you could be missing out on higher returns from more aggressive investments like stocks.

Are there any 3% CD rates?

3% CD rates are impossible to come by these days. Right now, CD rates are very low due to the Federal Reserve. The U.S. central bank has rates at zero percent in an effort to stimulate spending in the economy.

Are CD rates worth it?
CDs are best for short-term investments of 6 to 18 months. If you don't plan on using that money for longer than 18 months, you might better return with a brokerage account.

While CDs are safe and stable, you won't beat inflation. If you're a few decades from retirement, build wealth with brokerage accounts and save CDs for a portion of your portfolio.

Who is offering the best CD rates?

Quontic
Member FDIC

CD Rates - Up to 1.11% APY

  • $500 minimum opening deposit
  • FDIC insured
TermCD Rates
6 Months0.45% APY
1 Year0.50% APY
2 Years0.75% APY
3 Years1.00% APY
5 Years1.11% APY
CIT Bank
Member FDIC

CIT Bank Term CDs

  • Up to 0.50% APY
  • $1,000 minimum opening deposit
  • No monthly maintenance fee
TermCD Rates
6 Month0.30% APY
1 Year0.30% APY
13 Month0.30% APY
18 Month0.30% APY
2 Year0.40% APY
3 Year0.40% APY
4 Year0.50% APY
5 Year0.50% APY
Discover Bank
Member FDIC

Certificate of Deposit

  • 0.55% APY for 12-month term
  • 0.75% APY for 36-month term
  • 1.00% APY for 5-year term
CIT Bank
Member FDIC

CIT Bank No Penalty CD

  • 0.30% APY
  • Option to withdraw full balance and interest after 7 days of CD funding date
  • $1,000 minimum to open an account
  • 11 months
  • No monthly maintenance fee
CIT Bank
Member FDIC

CIT Bank Jumbo CDs

  • Up to 0.50% APY
  • $100,000 minimum opening deposit
  • No monthly maintenance fee
TermCD Rates
2 Year0.40% APY
3 Year0.40% APY
4 Year0.50% APY
5 Year0.50% APY
Discover Bank
Member FDIC

Discover CD Rates

  • $2,500 minimum opening deposit
  • No fees
  • FDIC insured
TermCD Rates
3 Months0.20% APY
6 Months0.25% APY
9 Months0.30% APY
1 Year0.55% APY
1.5 Years0.60% APY
2 Years0.65% APY
2.5 Years0.70% APY
3 Years0.75% APY
4 Years0.80% APY
5 Years1.00% APY
7 Years1.00% APY
10 Years1.00% APY
Continental Bank

High Yield CD - Earn up to 0.45%

0.45% APY for 6-month term

Continental Bank

No Penalty CD - Earn up to 0.45% APY

  • 0.45% APY for 11-month term
  • 0.40% APY for 3-month term

Bottom line

Certificates of deposit offer security. You won't need to worry about losing money. If you don't have to access your money for several years, a long-term CD can get you a better return than a traditional savings account.

But CDs are unlikely to build wealth for the future. If you want to make real gains, consider taxable brokerage accounts with Ally Invest, Betterment, or Robinhood.

Amber Kong is a content and creative at CreditDonkey, a bank comparison and reviews website. Write to Amber Kong at amber.kong@creditdonkey.com. Follow us on Twitter and Facebook for our latest posts.

Note: This website is made possible through financial relationships with some of the products and services mentioned on this site. We may receive compensation if you shop through links in our content. You do not have to use our links, but you help support CreditDonkey if you do.

Read Next:

10 Great Online Budgeting Tools You'll Love

Online Budgeting Tools

Quicken Alternatives

Quicken Alternatives

How to Make a Budget

How to Make a Budget

Emergency Fund Calculator

Emergency Fund Calculator

Savings Goal Calculator

Savings Goal Calculator

Best CD Rates

Best CD Rates

Ally Invest Coupon Codes

Get Up to $3,000

Expires 12/31/2021

The minimum qualifying deposit to receive a cash bonus is $10,000. Accounts will be reviewed 60 days after account opening to determine the total qualifying deposit. Corresponding cash bonus will be credited to the account within 10 business days. Once the bonus is credited to the account, the bonus and qualifying deposit (minus any trading losses) is not available for withdrawal for 300 days. If the qualifying deposit is withdrawn, the bonus may be revoked.

Deposit or TransferCash Bonus
$10,000 - $24,999$100
$25,000 - $99,999$250
$100,000 - $249,999$300
$250,000 - $499,999$600
$500,000 - $999,999$1,200
$1,000,000 - $1,999,999$2,000
$2,000,000+$3,000

Leave a comment about CD Rates Calculator?




About CreditDonkey
CreditDonkey is a bank comparison website. We publish data-driven analysis to help you save money & make savvy decisions.

Editorial Note: Any opinions, analyses, reviews or recommendations expressed on this page are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.

†Advertiser Disclosure: Many of the offers that appear on this site are from companies from which CreditDonkey receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). CreditDonkey does not include all companies or all offers that may be available in the marketplace.

*See the card issuer's online application for details about terms and conditions. Reasonable efforts are made to maintain accurate information. However, all information is presented without warranty. When you click on the "Apply Now" button you can review the terms and conditions on the card issuer's website.

CreditDonkey does not know your individual circumstances and provides information for general educational purposes only. CreditDonkey is not a substitute for, and should not be used as, professional legal, credit or financial advice. You should consult your own professional advisors for such advice.

About Us | Reviews | Deals | Tips | Privacy | Do Not Sell My Info | Terms | Contact Us
(888) 483-4925 | 680 East Colorado Blvd, 2nd Floor | Pasadena, CA 91101
© 2021 CreditDonkey Inc. All Rights Reserved.