Calculate your potential earnings from a CD investment.
Annually
Semi-Annually
Quarterly
Monthly
Daily
Total Value at Maturity
Total Interest Earned:
Understanding Your Certificate of Deposit (CD)
A Certificate of Deposit (CD) is a savings product offered by banks and credit unions that provides a guaranteed rate of return over a fixed period. Unlike a regular savings account, you agree to keep your money deposited for a specific term, ranging from a few months to several years. In exchange for this commitment, the financial institution typically offers a higher interest rate than you might find in a standard savings or checking account.
How the CD Calculator Works
Our CD Calculator helps you estimate the future value of your investment and the total interest you will earn by the end of the CD's term. It utilizes the compound interest formula, which accounts for the interest earned on both your initial deposit and the accumulated interest from previous periods.
The formula used for calculating the future value (FV) of a CD with compound interest is:
FV = P (1 + r/n)^(nt)
Where:
FV = Future Value of the investment/loan, including interest
P = Principal amount (the initial deposit)
r = Annual interest rate (as a decimal)
n = Number of times that interest is compounded per year
t = Number of years the money is invested or borrowed for
In our calculator:
Initial Deposit Amount (P): This is the principal amount you start with.
Annual Interest Rate (%): The yearly rate of return offered by the CD. This is converted to a decimal (e.g., 4.5% becomes 0.045) for calculations.
CD Term (Months): The duration of your investment. This is converted into years (t) by dividing by 12.
Compounding Frequency (n): This represents how often the interest is calculated and added to the principal within a year. Common options include annually (1), semi-annually (2), quarterly (4), monthly (12), or daily (365).
The calculator first determines the total number of compounding periods (nt) and the interest rate per period (r/n). It then applies the formula to find the total value at maturity. The total interest earned is simply the Future Value minus the Initial Deposit.
Key Benefits of CDs
Guaranteed Returns: You know exactly how much interest you will earn.
Safety: CDs are typically FDIC-insured (or NCUA-insured for credit unions) up to the maximum limits, making them a very low-risk investment.
Predictable Growth: Useful for saving for specific future goals where you need to know the exact amount available by a certain date.
Considerations
Liquidity Risk: Accessing your funds before the maturity date usually incurs a penalty, often a portion of the earned interest.
Interest Rate Risk: If market interest rates rise significantly after you've purchased a CD, you'll be locked into the lower rate until maturity.
Inflation Risk: The fixed rate might not keep pace with inflation, potentially reducing your purchasing power over time.
Use this calculator to compare different CD options and understand the potential growth of your savings!
function calculateCD() {
var initialDeposit = parseFloat(document.getElementById("initialDeposit").value);
var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value);
var cdTermMonths = parseFloat(document.getElementById("cdTermMonths").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
var interestEarnedDiv = document.getElementById("interestEarned");
if (isNaN(initialDeposit) || isNaN(annualInterestRate) || isNaN(cdTermMonths) || isNaN(compoundingFrequency) ||
initialDeposit <= 0 || annualInterestRate < 0 || cdTermMonths <= 0) {
alert("Please enter valid positive numbers for all fields.");
resultDiv.style.display = "none";
return;
}
var ratePerPeriod = annualInterestRate / 100 / compoundingFrequency;
var numberOfPeriods = cdTermMonths / 12 * compoundingFrequency;
var futureValue = initialDeposit * Math.pow(1 + ratePerPeriod, numberOfPeriods);
var totalInterest = futureValue – initialDeposit;
// Format results to two decimal places for currency
resultValueDiv.textContent = "$" + futureValue.toFixed(2);
interestEarnedDiv.textContent = "$" + totalInterest.toFixed(2);
resultDiv.style.display = "block";
}