60 Month CD Rate Calculator
Your Estimated Earnings:
Understanding 60-Month CDs and APY
A Certificate of Deposit (CD) is a type of savings account that holds a fixed amount of money for a fixed period of time, in exchange for an offered interest rate. The most common CD terms range from a few months to several years. A 60-month CD, also known as a 5-year CD, is a popular choice for those looking for a stable, predictable return on their savings over a medium-term horizon.
What is APY?
APY stands for Annual Percentage Yield. It represents the real rate of return earned on an investment, taking into account the effect of compounding interest. When comparing different CD offers, APY is a crucial metric because it reflects the total interest you will earn over a year, assuming interest is reinvested. A higher APY generally means higher earnings.
How the 60-Month CD Rate Calculator Works
This calculator helps you estimate the total interest you can earn and your final balance after 60 months (5 years) based on your initial deposit and the CD's APY. It uses the compound interest formula, which accounts for interest earned on both your initial deposit and the accumulated interest from previous periods. The formula is as follows:
Final Balance = P * (1 + r/n)^(nt)
Where:
- P = Principal amount (the initial deposit)
- r = Annual interest rate (as a decimal)
- n = Number of times that interest is compounded per year (for CDs, we often assume compounding occurs annually for APY calculations, so n=1)
- t = Time the money is invested for, in years (for a 60-month CD, t = 5 years)
The calculator simplifies this by directly using the APY, which already factors in compounding. The calculation effectively compounds the APY over the 5-year term.
Example Calculation:
Let's say you deposit $10,000 into a 60-month CD with an APY of 5.0%.
- Initial Deposit (Principal): $10,000
- Annual Percentage Yield (APY): 5.0% or 0.05
- Term: 60 months = 5 years
Using the calculator, you would input '10000' for the Initial Deposit and '5.0' for the APY.
The calculator will estimate your total earnings and final balance after 5 years.