Maturity Value
Interest Earned
Effective APY
| Period | Balance | Interest (Period) | Total Interest |
|---|
Table of Contents
A guaranteed rate, for a fixed term
A certificate of deposit (CD) pays a fixed interest rate in exchange for locking your money up for a set period — usually 3 months to 5 years. Use this calculator to see your maturity value, total interest earned, and effective APY at any term and compounding frequency.
How CD interest is calculated
CDs use the standard compound interest formula:
A = P × (1 + r ÷ n)n × t
- A — maturity value (principal + interest)
- P — initial deposit
- r — annual interest rate as a decimal (e.g. 0.05 for 5%)
- n — compounding periods per year (12 monthly, 365 daily, 4 quarterly, 1 annually)
- t — term in years
Worked example using the calculator's defaults ($10,000 deposit, 5% rate, 2-year term, monthly compounding):
- P = $10,000, r = 0.05, n = 12, t = 2
- r ÷ n = 0.05 ÷ 12 = 0.004167
- n × t = 12 × 2 = 24 periods
- (1.004167)24 ≈ 1.10494
- A = 10,000 × 1.10494 ≈ $11,049.41
- Interest earned: $1,049.41
- Effective APY: 5.116% (slightly above the 5.00% nominal rate, due to monthly compounding)
If interest compounded daily instead, the maturity value would be $11,051.71 — about $2 more over two years. Compounding frequency matters far less than the underlying rate.
CD rates by term length (2025–2026 environment)
The yield curve for CDs reflects where the market expects rates to go. As of 2025–2026, top nationally-available CD rates from online banks and credit unions:
| Term | Typical top APY | Maturity value on $10,000 |
|---|---|---|
| 3 months | 4.50%–5.10% | $10,112–$10,128 |
| 6 months | 4.40%–5.25% | $10,220–$10,263 |
| 1 year | 4.50%–5.25% | $10,450–$10,525 |
| 2 years | 4.25%–4.75% | $10,868–$10,972 |
| 3 years | 4.00%–4.50% | $11,249–$11,412 |
| 5 years | 3.85%–4.35% | $12,083–$12,373 |
Notice that longer-term CDs are paying LESS than 1-year CDs in this environment — an inverted yield curve. That's the market pricing in expected Fed rate cuts. When the curve is normal (longer = higher), CD ladders capture more yield; when inverted, sticking to 1–2 year CDs is often the better play.
CD vs high-yield savings vs Treasury bills
| 1-year CD | HYSA | 13-week T-bill | |
|---|---|---|---|
| Typical yield (2025–2026) | 4.5–5.25% APY (fixed) | 4.0–4.75% APY (variable) | 4.0–4.75% (annualized) |
| Liquidity | Locked, penalty for early withdrawal | Same-day access | Liquid after 4-week minimum (secondary market) |
| Federal protection | FDIC up to $250K | FDIC up to $250K | Full faith and credit of US government |
| State tax | Taxable | Taxable | Exempt from state & local tax |
| Best for | Known goals 6–24 months away | Emergency fund, near-term spending | Cash management in high-tax states |
For residents of high-income-tax states (California, New York, New Jersey, Oregon), the state-tax exemption on Treasury bills often makes their after-tax yield equal to or higher than a CD with the same headline rate.
Building a CD ladder
A CD ladder spreads your money across CDs of staggered maturities. With $25,000:
- Year 0: Buy $5,000 each in 1-yr, 2-yr, 3-yr, 4-yr, and 5-yr CDs.
- Year 1: 1-yr CD matures → reinvest in a new 5-yr CD (or spend it).
- Year 2: Original 2-yr CD matures → reinvest in 5-yr.
- Year 3, 4, 5: same pattern.
- By Year 5: All money is in 5-year CDs, but one matures every year.
You get the higher 5-year rate on the bulk of your money plus annual access to 20% of the total. The strategy works best in a normal (upward-sloping) yield curve. In an inverted curve like 2025–2026, a shorter ladder (3, 6, 9, 12 months) or just rolling 1-year CDs may capture more total yield.
Types of CDs
- Traditional CD. Fixed rate, fixed term, early withdrawal penalty.
- No-penalty CD (liquid CD). Withdraw any time after a 6–7 day initial period, no penalty. Typically 0.25–0.50% lower rate.
- Bump-up CD. You can request one rate increase during the term if rates rise. Usually starts at a slightly lower rate than traditional CDs.
- Step-up CD. Rate automatically increases at predetermined intervals. Less common.
- Jumbo CD. Requires $100,000+ deposit. Rate premium over regular CDs is small in 2025 (often 0–0.10%).
- Brokered CD. Bought through a brokerage, often with higher rates and tradeable on a secondary market — but no early withdrawal option, only resale (which can produce a loss if rates have risen).
- IRA CD. Held inside an IRA for tax-deferred growth. Rates are similar to taxable CDs; the tax wrapper is the difference.
Limitations of this calculator
- Assumes interest compounds and stays in the CD. Some CDs pay interest out to a linked account; in that case, your maturity value is just principal and the interest earned is your separate income stream.
- Ignores early withdrawal penalties. If you might not hold to maturity, subtract 3–12 months of interest from your projected return.
- Ignores taxes. CD interest is taxable as ordinary income in the year it accrues (even if you don't withdraw it). At a 24% marginal rate, a 5% CD yields about 3.8% after federal tax.
- Single-rate assumption. Real CDs may have promotional rates, tiered balance pricing, or step-up features not modeled here.
Sources & references
- FDIC National Rates and Rate Caps — weekly published national average rates for CDs and savings products.
- FDIC Deposit Insurance — the $250,000 federal coverage that backs CDs at member banks.
- NCUA Share Insurance — equivalent $250,000 coverage at federally insured credit unions.
- US Federal Reserve — current monetary policy and federal funds rate, which drives CD pricing.
- TreasuryDirect — T-bill alternative for cash savings, state-tax exempt.
FAQs
For short-to-medium-term savings, yes — top 1-year CDs from online banks and credit unions are paying 4.5–5.25% APY as of 2025–2026, well above inflation. For long-term wealth building (10+ years) stock index funds have historically outperformed CDs by a wide margin. The right answer depends on your time horizon: known goal within 5 years → CD ladder makes sense; 10+ year horizon with risk tolerance → equities are usually better. Don't lock long terms when the yield curve is inverted (short rates above long rates) — you'd be locking in a lower rate.
Typical penalties: 60–90 days of interest on CDs under 12 months, 180 days of interest on 1–3 year CDs, and 365 days or more of interest on 4–5 year CDs. The penalty is calculated on the amount withdrawn, not the full balance. In the worst case — withdrawing very early from a long-term CD — the penalty can exceed the interest earned, dipping into principal. The actual penalty schedule is in your CD's account disclosure; read it before depositing. No-penalty CDs avoid this entirely but typically pay 0.25–0.50% less.
Depends on rate direction and liquidity needs. CDs lock in a fixed rate for a fixed term — better when rates are falling (you locked in higher), worse when rates are rising (you're stuck while HYSA rates climb). HYSAs are fully liquid but the rate can drop any day. As of 2025–2026 with the Fed expected to gradually lower rates, CDs have a modest edge for money you won't need for 12+ months. For emergency funds and money you might need in 0–12 months, HYSAs are clearly better.
Effectively risk-free for principal up to $250,000 per depositor, per institution, per ownership category — that's the FDIC limit (NCUA at credit unions matches it). The federal government guarantees those deposits even if the bank fails. The genuine risk is inflation: a 5% CD during 4% inflation only delivers 1% real return. A 3% CD during 5% inflation is actually losing purchasing power. Always look at your CD rate relative to current CPI inflation, not just the nominal yield.
Instead of putting $25,000 into one 5-year CD, you split it into five $5,000 CDs with 1, 2, 3, 4, and 5-year terms. One matures every year — you can either spend it or roll it into a new 5-year CD. After 5 years, you have all your money in 5-year CDs paying the highest-tier rate, but with one maturing every year. Benefits: regular liquidity, exposure to rate changes (you reinvest annually at current rates), and typically a higher average yield than rolling 1-year CDs continuously. The main downside is complexity and tracking.