CD Interest Calculator

Enter three core inputs to get your result.

You can adjust any input to compare scenarios instantly. Testing different rates and compounding intervals shows how each one changes your final interest.

CD interest is calculated using the compound interest formula, which pays interest on both your original deposit and the interest already earned. The standard formula is A = P × (1 + r / n) raised to the power of (n × t). Here P is the principal, r is the annual rate as a decimal, n is the number of compounding periods per year, and t is the term in years.

Some short-term CDs instead use a simple daily interest method, where interest applies only to the principal. Most banks, however, compound interest, which is why your effective return is usually a little higher than the stated rate. Always check your bank's disclosure to confirm the method it uses.

Simple interest pays only on your original deposit, while compound interest pays on the deposit plus previously earned interest. The simple interest formula is Interest = Principal × Rate × Time. The compound formula adds interest back to the balance at set intervals, so future interest is calculated on a larger amount each period.

The gap between the two grows with time and compounding frequency. On a short one-year CD the difference is small. Over three to five years, compounding produces a clearly higher return than simple interest at the same rate.

For example, a $10,000 deposit at a 4% rate for three years earns $1,200 with simple interest. The same deposit compounded annually earns $1,248.64, which is $48.64 more. The longer the term, the wider that gap becomes.

Compounding frequency is how often the bank adds earned interest back to your balance. Daily compounding adds interest every day, while annual compounding adds it once a year. At the same rate, more frequent compounding produces a slightly higher return, because interest starts earning interest sooner.

The table below shows a $10,000 CD at a 4.00% base rate held for one year, across four common compounding intervals. Notice how the effective yield rises as compounding becomes more frequent.

The difference between daily and annual compounding here is $8.08 in one year. On larger deposits or longer terms, that gap widens. This is why two CDs with the same base rate can still pay different amounts.

Consider a $10,000 deposit in a two-year CD at a 4% rate, compounded monthly. Using the formula A = P × (1 + r / n)^(n × t), you set P as 10,000, r as 0.04, n as 12, and t as 2. The balance grows to $10,830.53, which means $830.53 in interest.

Now compare that with annual compounding at the same rate. The balance reaches $10,816.00, or $816.00 in interest. Monthly compounding earns $14.53 more over the two years for this deposit. Enter your own figures in the calculator above to model your exact result.

The interest you earn scales directly with your deposit, because it is calculated as a percentage of your principal. The table below shows what three common deposit amounts would earn in a one-year CD at a 4.00% APY, held to maturity.

A larger deposit earns proportionally more interest at the same rate and term. Doubling the deposit doubles the interest, while a higher rate or a longer term raises it further. Enter your own deposit in the calculator above for an exact figure.

The annual percentage yield, or APY, expresses your total yearly return after compounding is included. It is always equal to or higher than the base interest rate, which is why banks advertise CDs in APY. If your bank quotes an APY rather than a base rate, enter that value so your result reflects true earnings.

To compare two CDs on a true like-for-like basis, or to convert a base rate into APY, use our dedicated CD APY calculator.

Several factors decide your total interest beyond the headline rate. Understanding them helps you compare offers accurately.

You can estimate CD interest by hand with the compound interest formula. For a one-year CD, multiply your deposit by the rate, so $10,000 at a 4.00% rate earns $400. For terms longer than a year, use A = P × (1 + r / n)^(n × t), then subtract the principal to find the interest earned.

As an example, take a $2,000 deposit at a 3.75% rate for three years, compounded annually. The balance grows to about $2,233.54, which is $233.54 in interest. Each year's interest is calculated on the previous year's larger balance, not just the original deposit, which is why the total is higher than plain multiplication.

A by-hand estimate is useful for a quick check, but it assumes a single fixed rate and steady compounding. For an exact figure across any term and compounding interval, the calculator above is faster and removes the risk of a math error.

A small oversight can throw off your estimate. Avoiding the errors below keeps your projection accurate.