6 Month Cd Rates Calculator

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6-Month CD Rates Calculator

Understanding 6-Month CD Rates and Interest Calculation

A Certificate of Deposit (CD) is a savings product offered by banks and credit unions that holds a fixed amount of money for a fixed period of time, such as six months, in exchange for a fixed interest rate. CDs are generally considered a low-risk investment because they are insured by the FDIC (Federal Deposit Insurance Corporation) up to certain limits. The key benefit of a CD is the predictable return on your investment, making it easier to budget and plan your finances.

How 6-Month CD Interest is Calculated

The interest earned on a 6-month CD is typically calculated based on the principal amount invested, the stated annual interest rate, and the term of the CD (in this case, six months). The formula used for this calculator is:

Interest Earned = Principal Amount × (Annual Interest Rate / 100) × (Term in Months / 12)

For a 6-month CD, the 'Term in Months' is 6.

Example Calculation:

Let's say you invest $10,000 (Principal Amount) in a 6-month CD with an Annual Interest Rate of 4.5%.

  • Principal Amount: $10,000
  • Annual Interest Rate: 4.5%
  • Term: 6 months

Interest Earned = $10,000 × (4.5 / 100) × (6 / 12) Interest Earned = $10,000 × 0.045 × 0.5 Interest Earned = $225

After six months, you would earn $225 in interest on your initial $10,000 investment. Your total return would be $10,225.

function calculateCDInterest() { var principalAmount = parseFloat(document.getElementById("principalAmount").value); var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value); var termInMonths = 6; // Fixed for a 6-month CD var resultDiv = document.getElementById("result"); if (isNaN(principalAmount) || isNaN(annualInterestRate) || principalAmount <= 0 || annualInterestRate < 0) { resultDiv.innerHTML = "Please enter valid positive numbers for Principal Amount and a non-negative Annual Interest Rate."; return; } var interestEarned = principalAmount * (annualInterestRate / 100) * (termInMonths / 12); var totalReturn = principalAmount + interestEarned; resultDiv.innerHTML = "Interest Earned over 6 months: $" + interestEarned.toFixed(2) + "Total Return after 6 months: $" + totalReturn.toFixed(2); }

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