Calculate the potential interest earned on your Certificate of Deposit (CD) over time.
Annually
Semi-Annually
Quarterly
Monthly
Daily
Estimated Interest Earned
$0.00
Understanding Your CD Loan Interest
A Certificate of Deposit (CD) is a savings product offered by banks and credit unions that provides a fixed interest rate for a specified term. Unlike regular savings accounts, you agree to leave your money in the CD for the entire term to earn the advertised rate. If you withdraw funds early, you typically incur a penalty.
This CD Loan Calculator helps you estimate the total interest you can expect to earn on your investment. It takes into account the initial deposit (principal), the annual interest rate, the duration of the CD (term), and how often the interest is compounded.
How the Calculation Works
The calculator uses the compound interest formula to determine the future value of your CD and then subtracts the principal to show the interest earned. The formula for compound interest is:
A = P (1 + r/n)^(nt)
Where:
A = the future value of the investment/loan, including interest
P = the principal investment amount (the initial deposit)
r = the annual interest rate (as a decimal)
n = the number of times that interest is compounded per year
t = the number of years the money is invested or borrowed for
To calculate the interest earned specifically, we use:
Interest Earned = A – P
In our calculator:
The 'Principal Amount' is P.
The 'Annual Interest Rate' is converted to a decimal (e.g., 4.5% becomes 0.045) for r.
The 'Compounding Frequency' directly provides n.
The 'Term (Months)' is converted to years by dividing by 12 for t.
Example Calculation:
Let's say you invest $10,000 (Principal) in a CD with an annual interest rate of 4.5% for 24 months (2 years), compounded quarterly.
P = $10,000
r = 0.045 (4.5% / 100)
n = 4 (Quarterly compounding)
t = 2 (24 months / 12 months/year)
First, calculate the future value (A):
A = 10000 * (1 + 0.045/4)^(4*2)
A = 10000 * (1 + 0.01125)^8
A = 10000 * (1.01125)^8
A = 10000 * 1.09308
A ≈ $10,930.80
Now, calculate the interest earned:
Interest Earned = A – P
Interest Earned = $10,930.80 – $10,000
Interest Earned ≈ $930.80
Our calculator would show approximately $930.80 in interest earned.
When to Use This Calculator:
Comparing CD Offers: Evaluate different CD products from various financial institutions to see which offers the best potential return.
Financial Planning: Understand how much interest you can expect from your savings to incorporate into your financial goals.
Understanding Compound Growth: Visualize the power of compounding interest over different terms and rates.
Remember that this calculator provides an estimate. Actual returns may vary slightly due to specific bank calculation methods or fees.
function calculateCDLoan() {
var principal = parseFloat(document.getElementById("principal").value);
var annualRate = parseFloat(document.getElementById("annualRate").value);
var termMonths = parseFloat(document.getElementById("termMonths").value);
var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value);
var resultDiv = document.getElementById("result");
var resultValueDiv = document.getElementById("result-value");
if (isNaN(principal) || isNaN(annualRate) || isNaN(termMonths) || isNaN(compoundingFrequency)) {
resultValueDiv.innerHTML = "Please enter valid numbers.";
resultValueDiv.style.color = "#dc3545";
return;
}
if (principal <= 0 || annualRate < 0 || termMonths <= 0 || compoundingFrequency <= 0) {
resultValueDiv.innerHTML = "Inputs must be positive values.";
resultValueDiv.style.color = "#dc3545";
return;
}
var ratePerPeriod = annualRate / 100 / compoundingFrequency;
var numberOfPeriods = termMonths / 12 * compoundingFrequency;
// Formula: A = P (1 + r/n)^(nt)
var futureValue = principal * Math.pow(1 + ratePerPeriod, numberOfPeriods);
var interestEarned = futureValue – principal;
resultValueDiv.innerHTML = "$" + interestEarned.toFixed(2);
resultValueDiv.style.color = "#28a745";
}