CD Interest Calculator
Compute the exact interest earned on your certificate of deposit across any compounding schedule and term length.
Results
The CD Interest Calculator isolates the interest component from the total maturity value. The output separates the original principal deposit from the cumulative interest earned, providing a clear view of the exact return generated by the certificate of deposit.
Interest Accumulation Mechanics
CD interest accumulates through 2 primary methods: compound interest and simple interest. Most certificates of deposit at FDIC-insured banks use compound interest, where earned interest is added to the principal and subsequent interest calculations include the previously earned interest.
The Compound Interest Formula
The compound interest formula for CD interest calculation is A = P(1 + r/n)nt. In this formula, A represents the final maturity balance, P represents the initial principal deposit, r represents the nominal annual interest rate (APR), n represents the number of compounding periods per year, and t represents the term in years. The interest earned equals A minus P.
Daily vs. Monthly Interest Crediting
Daily compounding credits interest to the account every day (365 times per year), while monthly compounding credits interest 12 times per year. A $10,000 CD at 5.00% APR earns $512.67 with daily compounding over 1 year compared to $511.62 with monthly compounding — a difference of $1.05. The gap widens with larger principals and longer terms.
Interest Disbursement Options
Banks offer 2 interest disbursement options for certificate of deposit accounts: reinvestment (compounding) or periodic payout. Reinvestment adds earned interest back to the principal, increasing total returns through compound growth. Periodic payout distributes interest to a linked checking or savings account at regular intervals (monthly, quarterly, or annually) without compounding. Retirees and income-focused depositors typically select periodic payouts for steady cash flow.
Rule of 72 Doubling Estimator
The Rule of 72 estimates the number of years required to double a principal deposit. Divide 72 by the annual interest rate to determine the approximate doubling time. A CD earning 4% APY doubles in approximately 18 years. A CD earning 6% APY doubles in approximately 12 years.
Interactive Rule of 72 Calculator
Adjust the interest rate to see how long it takes to double your deposit.
Formula: 72 ÷ 5.0 = 14.4 years
Interest Rate Benchmarks
CD interest rates are benchmarked against 3 primary reference rates: the Federal Funds Rate, the 10-Year Treasury Yield, and the Prime Rate. Banks set CD rates at a spread above or below these benchmarks depending on their funding needs, competitive positioning, and liquidity requirements.
Federal Funds Rate
4.25–4.50%The overnight lending rate between banks, set by the Federal Reserve's Open Market Committee (FOMC).
10-Year Treasury Yield
4.00–4.50%The yield on 10-year US government bonds, used as a benchmark for long-term CD rates.
Prime Rate
7.25–7.50%The base rate banks use for lending to their most creditworthy customers, typically 3% above the Fed Funds Rate.
Accrued Interest Reporting
Banks report accrued CD interest to the IRS annually on Form 1099-INT, regardless of whether the interest has been withdrawn or compounded. For multi-year CDs, this means the depositor owes income tax on interest earned each year, even though the funds remain locked in the certificate. Depositors should plan for this annual tax liability to avoid underpayment penalties.
Calculate Your CD Interest
Enter your deposit amount, rate, and term to compute the exact interest your certificate of deposit generates at maturity.
Calculate InterestFAQs
How is CD interest calculated?
CD interest is calculated by applying the compound interest formula A = P(1 + r/n)nt to the principal deposit. The variable r represents the nominal annual rate, n represents the compounding frequency, and t represents the term in years. The interest earned equals the maturity value (A) minus the original principal (P).
What is the Rule of 72 for CDs?
The Rule of 72 estimates the number of years required to double a principal deposit by dividing 72 by the annual interest rate. A CD earning 5% APY doubles the principal in approximately 14.4 years (72 ÷ 5 = 14.4).
Is CD interest credited daily or monthly?
CD interest crediting depends on the bank's compounding schedule. Daily compounding accrues interest every day (365 times per year). Monthly compounding adds interest once per month (12 times per year). The compounding frequency directly affects the effective APY.
Does CD interest compound on weekends and holidays?
Yes, CD interest compounds on weekends and holidays. Interest accrues on a 365-day basis (366 in leap years) regardless of business days or bank holidays.
Can I receive CD interest payments before maturity?
Yes, some banks allow periodic interest disbursements instead of compounding. The depositor can elect monthly, quarterly, or annual payouts to a linked account. This provides regular income but reduces the total maturity value because interest no longer compounds on itself.