CD Calculator – Certificate of Deposit

Created by Tomasz Jedynak, PhD
Reviewed by Bogna Szyk and Jack Bowater
Last updated: Jun 05, 2023

If you're considering investing in a certificate of deposit, this CD calculator is designed for you. Our CD interest calculator makes quick and easy work of finding the best deal for you. Thanks to our CD return calculator, you can assess not only the final balance of your investment and the total value of the interest earned but also choose the certificate of deposit with the parameters that suit you best. As long as you use our certificate of deposit calculator, CD calculations don't have to be complicated.

In the text below, we will explain:

  • What is a certificate of deposit?
  • How does a certificate of deposit work?
  • What is the formula for calculating CD interest, and how to calculate the CD return rate?
  • How to use our CD calculator?

We will also explain how to calculate the total interest earned in any certificate of deposit with a step-by-step guide, no matter the interest rate, term, or compounding frequency. In addition, we will also show you how to use our application as a CD rate calculator.

What is a certificate of deposit definition?

According to the standard definition, a certificate of deposit is a kind of investment vehicle categorized by a fixed maturity date and a fixed interest rate.

The CD can be issued in any denomination; however, there are usually some minimum investment requirements. Certificates of deposits can be issued electronically by commercial banks, thrift institutions, and credit unions.

One of the key characteristic features of a CD is that it restricts access to the invested funds until the specified date in the future (the maturity date).

How does a certificate of deposit work?

As a type of time deposit, CDs are locked in for a certain period (usually between one month and ten years). It means that you are not allowed to withdraw funds on demand. As a rule, you can do it only when the maturity date comes.

The CDs pay interest in specified, fixed terms. Most CDs credit interest monthly. Other typical terms are a week, three or six months, or one to five years. The interest paid on the investment payment is usually transferred to a CD owner's bank account.

Apart from the investment period, the investment efficiency of CDs depends on the interest rate (APY) (described further in the APY calculator) and the compounding frequency. Generally, the higher the interest rate and the more frequent the compounding, the more profitable the investment.

In exchange for "freezing" the money, CDs usually offer higher interest rates than standard savings accounts. However, compared to investing in the stock market, CDs do not provide a high return.

On the other hand, investing in CDs is relatively safe as they are insured. In the USA, the accountable institutions are the Federal Deposit Insurance Corporation (FDIC) for banks and the National Credit Union Administration (NCUA) for credit unions.

It is also worth knowing that there are typically no extra fees related to CDs (except a fee for early withdrawal).

The formula used in CD interest calculator

Actually, the formula used in the CD calculator is exactly the same as the standard formula for compound interest that many finance calculations use. For people without a financial background, the CD interest formula may be quite complex because it considers not only the annual interest rate and the number of years but also the number of times the interest is compounded per year. If you are unsure what compounding is, take a look at the article accompanying the compound interest calculator.

The formula for calculating the final balance of an investment in a certificate of deposit is as follows:

FB=ID(1+rm)mt,{\rm FB} = {\rm ID} \left(1 + \frac{r}{m}\right)^{mt},


  • FB\rm FBFinal balance (often called the future value in similar calculations, e.g., in the future value calculator);
  • ID\rm IDInitial deposit (also referred to as present value);
  • rr – The annual interest rate (in decimal form);
  • mmCompounding frequency – the number of times the interest is compounded per year; and
  • ttTerm, i.e., the number of years the money is invested.

How to use our CD calculator?

If you are afraid of the formula used in CD interest calculations or don't want to perform all these tedious calculations on paper, don't worry. Instead of making all calculations by yourself, you can use our CD calculator, which does all necessary computations in less than a second. All you need to do is provide the information about the initial deposit, certificate of deposit interest rate, and the term. Let's start from the beginning:

  1. Firstly, in the field initial deposit, type in the amount of money you will invest. It is the starting balance of your deposit.

  2. Secondly, provide the interest rate of the certificate of deposit you want to consider in the interest rate field. It should be the actual (published) interest rate, not the annual percentage yield.

  3. As a next step, in the field term, type in the number of years and months you will invest. In other words, it's the period of time for the particular certificate of deposit to mature.

  4. Finally, in the field compound frequency, select the appropriate compounding frequency.

That's it! In a trice, our CD calculator makes all the necessary computations and gives you the results. They are shown in the field final balance, where you can see how much you will receive after the investment period, and in the field interest earned, which provides information about your total profit from the investment.

And last but not least, remember that you can use this CD calculator in a few ways. You can use this calculator as an ordinary investment return calculator. Alternatively, you can assume the amount of interest you want to earn and try to change other parameters in order to achieve this goal. Our calculator may also work as a CD rate calculator – if you provide all information except for the interest rate, the application will calculate the appropriate CD rate.

For those of you interested in investing, the investment calculator may be worth visiting next, too!

Tomasz Jedynak, PhD
Initial deposit
Interest rate
Compounding frequency
Final balance
Interest earned
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