Your estimated CD savings will be:
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Total Interest Earned:
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Understanding Certificate of Deposit (CD) Savings
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 a higher interest rate than a regular savings account. When you purchase a CD, you agree to leave your money in the account until maturity. In return, the bank usually offers a higher Annual Percentage Yield (APY) than standard savings accounts. CDs are a good option for savers who want a guaranteed return on their investment and don't need immediate access to their funds.
How the CD Savings Calculator Works
This calculator helps you estimate the future value of your investment in a CD, including the total interest earned. It uses the compound interest formula, which is fundamental to understanding how your savings grow over time.
The formula used is:
Future Value (FV) = P (1 + r/n)^(nt)
P = Principal amount (the initial deposit)
r = Annual interest rate (as a decimal)
n = Number of times that interest is compounded per year (compounding frequency)
t = Time the money is invested or borrowed for, in years
For example, if you invest $10,000 (P) at an annual interest rate of 4.5% (r = 0.045) compounded monthly (n = 12) for 5 years (t), the calculation would be:
The total interest earned would be the Future Value minus the Principal: $12,517.80 – $10,000 = $2,517.80.
Key Considerations for CDs:
Interest Rate: CD rates vary significantly between banks and depend on market conditions and the term length. Longer terms often offer higher rates.
Compounding Frequency: More frequent compounding (e.g., daily vs. annually) leads to slightly higher earnings due to the effect of earning interest on previously earned interest.
Early Withdrawal Penalties: CDs typically impose penalties if you withdraw funds before the maturity date. These penalties can reduce your principal or negate the interest earned. Always check the specific terms and conditions of the CD.
FDIC Insurance: CDs from federally insured banks are protected by the FDIC up to the allowable limits, providing a secure investment option.
This calculator provides an estimate based on the provided inputs. It does not account for taxes on interest earnings or any potential early withdrawal penalties.
function calculateCDSavings() {
var initialDeposit = parseFloat(document.getElementById("initialDeposit").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var termLength = parseFloat(document.getElementById("termLength").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultSpan = document.getElementById("finalSavings");
var interestSpan = document.getElementById("totalInterest");
// Clear previous results
resultSpan.textContent = "–";
interestSpan.textContent = "–";
// Input validation
if (isNaN(initialDeposit) || initialDeposit <= 0) {
alert("Please enter a valid initial deposit amount greater than zero.");
return;
}
if (isNaN(annualInterestRate) || annualInterestRate 100) {
alert("Please enter a valid annual interest rate between 0 and 100.");
return;
}
if (isNaN(termLength) || termLength <= 0) {
alert("Please enter a valid term length in years greater than zero.");
return;
}
if (isNaN(compoundingFrequency) || compoundingFrequency <= 0) {
alert("Please select a valid compounding frequency.");
return;
}
var ratePerPeriod = annualInterestRate / 100 / compoundingFrequency;
var numberOfPeriods = termLength * compoundingFrequency;
// Calculate future value using compound interest formula
var futureValue = initialDeposit * Math.pow(1 + ratePerPeriod, numberOfPeriods);
// Calculate total interest earned
var totalInterestEarned = futureValue – initialDeposit;
// Format results
var formattedFutureValue = futureValue.toFixed(2);
var formattedTotalInterest = totalInterestEarned.toFixed(2);
resultSpan.textContent = "$" + formattedFutureValue;
interestSpan.textContent = "$" + formattedTotalInterest;
}