Cd Calculator Rates

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Understanding CD Rates and APY

Certificates of Deposit (CDs) are a popular savings product offered by banks and credit unions. They allow you to deposit a sum of money for a fixed period, during which your money earns interest at a predetermined rate. In return for agreeing to keep your money deposited for the term, the financial institution typically offers a higher interest rate than you might find in a standard savings or checking account.

When comparing CDs, two key terms you'll encounter are the stated interest rate and the Annual Percentage Yield (APY). The stated interest rate is the nominal rate of interest paid on the CD. APY, on the other hand, takes into account the effect of compounding interest. Compounding means that the interest earned on your deposit is added back to the principal, and then future interest is calculated on this new, larger amount. This can significantly increase the total return over the life of the CD, especially for longer terms or higher interest rates.

The APY is a more accurate reflection of how much your investment will grow over a year because it includes the impact of this compounding. For example, a CD with a 4.00% interest rate compounded daily will have a slightly higher APY than a CD with a 4.00% interest rate compounded quarterly or annually. Understanding the difference between the stated rate and the APY is crucial for making informed decisions about where to put your savings to work.

CD Rate and APY Calculator

Annually (1) Semi-Annually (2) Quarterly (4) Monthly (12) Weekly (52) Daily (365)

Results:

Principal: —

Stated Annual Rate: —

Compounding Frequency: —

Calculated APY: —

Estimated Annual Interest Earned: —

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