Certificate of Deposit Rates Calculator

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Certificate of Deposit (CD) Interest Calculator

Annually Semi-Annually Quarterly Monthly Daily

Your CD Interest Projection

Enter your details above to see your projected earnings.

function calculateCDInterest() { var principal = parseFloat(document.getElementById("principal").value); var annualInterestRate = parseFloat(document.getElementById("annualInterestRate").value); var termInYears = parseFloat(document.getElementById("termInYears").value); var compoundingFrequency = parseInt(document.getElementById("compoundingFrequency").value); var resultDiv = document.getElementById("result"); resultDiv.innerHTML = ""; // Clear previous results if (isNaN(principal) || isNaN(annualInterestRate) || isNaN(termInYears) || isNaN(compoundingFrequency)) { resultDiv.innerHTML = "Please enter valid numbers for all fields."; return; } if (principal <= 0 || annualInterestRate < 0 || termInYears <= 0 || compoundingFrequency <= 0) { resultDiv.innerHTML = "Please enter positive values for all fields, except for the interest rate which can be zero."; return; } // Formula for compound interest: A = P (1 + r/n)^(nt) // Where: // A = the future value of the investment/loan, including interest // P = principal investment amount (the initial deposit) // r = 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 var ratePerPeriod = (annualInterestRate / 100) / compoundingFrequency; var numberOfPeriods = compoundingFrequency * termInYears; var futureValue = principal * Math.pow((1 + ratePerPeriod), numberOfPeriods); var totalInterestEarned = futureValue – principal; // Displaying results var outputHTML = "

Projected Earnings

"; outputHTML += "Initial Deposit: $" + principal.toLocaleString('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; outputHTML += "Annual Interest Rate: " + annualInterestRate.toFixed(2) + "%"; outputHTML += "CD Term: " + termInYears + " Year(s)"; outputHTML += "Compounding Frequency: " + getCompoundingFrequencyName(compoundingFrequency) + ""; outputHTML += "Total Interest Earned: $" + totalInterestEarned.toLocaleString('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; outputHTML += "Total Value at Maturity: $" + futureValue.toLocaleString('en-US', { minimumFractionDigits: 2, maximumFractionDigits: 2 }) + ""; resultDiv.innerHTML = outputHTML; } function getCompoundingFrequencyName(frequency) { switch (frequency) { case 1: return "Annually"; case 2: return "Semi-Annually"; case 4: return "Quarterly"; case 12: return "Monthly"; case 365: return "Daily"; default: return "Other"; } }

Understanding Certificates of Deposit (CDs) and Interest Calculation

A Certificate of Deposit (CD) is a type of savings account that offers a fixed interest rate for a specific term. Once you deposit money into a CD, you agree to leave it there for the duration of the term, typically ranging from a few months to several years. In return, the financial institution usually offers a higher interest rate than a standard savings account. This predictability makes CDs a popular choice for individuals looking to save for a specific goal with a guaranteed return.

How Interest is Calculated on a CD

The interest earned on your CD is calculated using the principle of compound interest. This means that not only does your initial deposit (the principal) earn interest, but the accumulated interest also starts earning interest over time. The more frequently your interest is compounded, the faster your money can grow.

The formula used in this calculator is the compound interest formula:

A = P (1 + r/n)^(nt)

Where:

  • A is the future value of the investment/loan, including interest.
  • P is the principal investment amount (your initial deposit).
  • r is the annual interest rate (expressed as a decimal, e.g., 4.5% becomes 0.045).
  • n is the number of times that interest is compounded per year (e.g., 1 for annually, 4 for quarterly, 12 for monthly).
  • t is the number of years the money is invested or borrowed for (the CD term).

This calculator helps you estimate how much interest you can earn on your initial deposit over the chosen term, taking into account the annual interest rate and how often the interest is compounded.

Example Calculation:

Let's say you invest $15,000 in a CD with an annual interest rate of 5.0% for a term of 3 years. If the interest is compounded quarterly (n=4), here's how the calculation would work:

  • Principal (P): $15,000
  • Annual Interest Rate (r): 5.0% or 0.05
  • Term in Years (t): 3
  • Compounding Frequency (n): 4 (quarterly)

First, calculate the rate per period: r/n = 0.05 / 4 = 0.0125

Next, calculate the total number of compounding periods: n*t = 4 * 3 = 12

Now, plug these into the formula:

A = 15000 * (1 + 0.0125)^(12) A = 15000 * (1.0125)^12 A = 15000 * 1.1607545… A ≈ $17,411.32

The total interest earned would be A – P: $17,411.32 – $15,000 = $2,411.32

This means that after 3 years, your initial $15,000 deposit would grow to approximately $17,411.32, with about $2,411.32 being the interest earned. Use the calculator above to explore different scenarios for your savings goals.

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