A certificate of deposit (CD) locks up a fixed amount of money for a set term at a fixed interest rate. In exchange for not touching it, you typically get a higher, guaranteed rate than a regular savings account. This calculator shows what your deposit grows to by maturity.
The default models a $10,000 deposit at 4.5% for 5 years, compounded daily — a common setup. CDs are usually a single lump sum with no added contributions, so the contribution is set to zero.
How CD interest compounds
Most CDs compound interest daily or monthly and credit it to your balance on a regular schedule. Because the rate is fixed for the whole term, a CD is one of the most predictable ways to earn interest — there's no market risk, and the maturity value is essentially locked in the day you open it.
Set the compounding frequency to match your bank's terms (daily is most common) to see an accurate maturity figure. The effective annual yield (APY) at the top reflects that compounding.
APY vs interest rate on a CD
Banks advertise CDs by their APY, which already includes the effect of compounding — so the APY is the number to compare between CDs. A 4.5% nominal rate compounded daily is an APY of about 4.6%. When you shop around, line up APYs, not nominal rates.
Because the rate is fixed, a CD's biggest risk isn't losing money — it's opportunity cost. If rates rise after you lock in, you're stuck at the old rate until maturity; if rates fall, you look smart for locking in.
When a CD makes sense
CDs suit money you know you won't need until a specific date — a down payment in two years, say. They're FDIC-insured up to legal limits, so the principal is safe. The trade-off is liquidity: withdrawing early usually triggers a penalty of several months' interest.
For money you might need sooner, a high-yield savings account keeps similar safety with full access. For money you won't touch for many years, investing has historically out-earned CDs, albeit with risk. A CD sits comfortably in between.
Frequently asked questions
How much interest does a CD earn?
It depends on your deposit, the APY, and the term. For example, $10,000 in a 5-year CD at 4.5% earns roughly $2,500 in interest by maturity. Enter your own figures above for an exact number.
Is CD interest compounded daily?
Often, yes — many CDs compound daily and credit interest monthly, though some compound monthly. Set the compounding frequency to match your bank to model it accurately.
What is APY on a CD?
APY (annual percentage yield) is the real annual return after compounding is included. It's the figure banks advertise and the right one to compare CDs against each other.
Are CDs worth it?
For safe, predictable returns on money you won't need until a set date, yes. The downsides are limited liquidity and the risk that rates rise after you lock in. They're a middle ground between savings accounts and investing.
Worked examples
Each example below shows inputs fed directly into the compound interest engine — outputs are computed at build time, not hand-typed.
1-year CD at 4.75%
$10,000 deposited in a 1-year CD at 4.75% nominal rate compounded monthly.
A $10,000 1-year CD at 4.75% produces about $484 in interest — an effective APY of about 4.856%. CDs lock in this rate regardless of what happens to market rates during the term.
5-year CD at 4.75%
$25,000 deposited in a 5-year CD at 4.75% nominal rate compounded monthly.
A $25,000 5-year CD at 4.75% grows to roughly $31,700 — earning about $6,700 in interest. The rate is fixed for the full term, so if savings account rates fall, the CD outperforms; if rates rise, you may miss the upside.
More questions answered
How much does a $10,000 CD earn?
At 4.75% APY for 1 year, a $10,000 CD earns about $475. For 5 years at the same rate, it earns roughly $2,605 (with compounding). The exact amount depends on whether the rate is quoted as APY or nominal rate, and how often interest compounds — enter those details in the calculator above for a precise figure.
Is CD interest compounded?
Most CDs compound interest daily or monthly. Compounding daily at a given nominal rate produces a slightly higher APY than monthly — but banks are required to advertise the APY, which already accounts for their specific compounding schedule. Enter the APY from the bank's disclosure for accurate projections.