Calculate CD interest and maturity value from the APY or APR and compounding, convert APY to APR, and see what an early withdrawal penalty costs.
By AdminDrafted with AI writing toolsUpdated Checked examples: 6
$10,000.00 at 4% APY (3.9223% APR) grows to $10,400.00 over 12 months, earning $400.00. Cashing out after 6 months returns $10,099.98 once the $98.06 penalty is taken.
| Month | Interest | Balance | Cash-out value after penalty |
|---|---|---|---|
| 1 | $32.74 | $10,032.74 | $9,934.68 |
| 2 | $32.84 | $10,065.58 | $9,967.52 |
| 3 | $32.95 | $10,098.53 | $10,000.48 |
| 4 | $33.06 | $10,131.59 | $10,033.54 |
| 5 | $33.17 | $10,164.76 | $10,066.71 |
| 6 | $33.28 | $10,198.04 | $10,099.98 |
| 7 | $33.39 | $10,231.42 | $10,133.37 |
| 8 | $33.50 | $10,264.92 | $10,166.86 |
| 9 | $33.60 | $10,298.52 | $10,200.47 |
| 10 | $33.71 | $10,332.24 | $10,234.18 |
| 11 | $33.83 | $10,366.06 | $10,268.01 |
| 12 | $33.94 | $10,400.00 | $10,400.00 |
Each month counts as 365 ÷ 12 days. Banks count the actual days, which can move daily-compounded interest by a few cents.
Simple interest on the deposit at the APR for the penalty period.
A certificate of deposit pays a fixed rate for a fixed term. The value at maturity is the deposit times (1 + APR ÷ k) raised to k × years, where k is the number of compounding periods a year; entered as an APY, the same value is the deposit times (1 + APY) raised to the years. The calculator converts between the two rates and shows what breaking the CD early leaves you after a penalty of a set number of months of interest.
With the defaults, $10,000 in a 12-month CD at 4.00% APY compounded daily earns $400.00. That APY equals an APR of 3.9223%. Cashing out after 6 months with a 3-month penalty leaves $10,099.98, since the $98.06 penalty takes about half of the $198.04 earned by then.
The penalty is computed as simple interest on the deposit at the APR. Deposit agreements differ, and Regulation DD requires the bank to disclose how its penalty is calculated. Terms in months use 365 ÷ 12 days per month.
A CD's value at maturity is deposit × (1 + APY)^years, and the interest is that value minus the deposit. $10,000 in a 12-month CD at 4.00% APY grows to $10,400.00, earning $400. The formula assumes the interest stays in the CD until it matures.
The APY includes compounding; the APR, the stated rate, does not. From an APR compounded k times a year, APY = (1 + APR ÷ k)^k − 1. Going back, APR = k × ((1 + APY)^(1/k) − 1). With continuous compounding, APY = e^APR − 1.
With the APY fixed, the compounding frequency changes only the stated APR, not what the CD pays. With the APR fixed, more frequent compounding pays more: $10,000 at a 4% APR for a year earns $400.00 compounded yearly and $408.08 compounded daily.
Regulation DD (Truth in Savings) makes banks disclose the APY, so compare CDs on APY.
Regulation DD's appendix works through a $1,000 CD held 182 days at a 6% APR compounded daily: 1,000 × (1 + 0.06 ÷ 365)^182 − 1,000 = $30.37 of interest.
A term in days is divided by 365. A term in months counts each month as 365 ÷ 12 days, while banks count the actual days, so a statement can differ by a few cents.
Most CDs charge a set number of months' or days' interest. As simple interest at the APR, penalty = deposit × APR × months ÷ 12. On $10,000 at a 3.9223% APR, a 3-month penalty is 10,000 × 0.039223 × 3 ÷ 12 = $98.06. A 90-day penalty is about 3 months.
Cashing out after 6 months, the balance is 10,000 × 1.04^0.5 = $10,198.04, and the penalty leaves $10,099.98. After one month only $32.74 has been earned, so the same penalty takes $65.32 of the deposit.
| Scenario | Value at maturity | Early cash-out value |
|---|---|---|
| Default | 10400.00 | 10099.98 |
| Principal loss | 10400.00 | 9934.68 |
| APR monthly | 10616.78 | 10153.78 |
The first two rows are the $10,000, 4% APY CD cashed out after 6 months and after 1 month. The last is a 6% APR compounded monthly, cashed out after 6 months: 10,000 × 1.005^6 = $10,303.78, less a $150 penalty.
With a 3-month penalty, the interest earned covers the penalty after about 3.0 months; cashing out from then on returns at least the full deposit.
The deposit agreement does. The federal minimum is in Regulation D: money withdrawn within six days of deposit must lose at least seven days' simple interest. Under Regulation DD the bank must disclose how its penalty is calculated (CFPB, 12 CFR 1030.4).
In the US, CD interest is taxed as ordinary income. At a 24% rate, the $10,000 CD keeps $304 of its $400 of interest.
FDIC insurance covers CDs up to $250,000 per depositor, per insured bank, for each ownership category, counting principal plus accrued interest. A $245,000 deposit at 4% APY passes the limit after about 6.2 months.
For deposits added over time, use the compound interest calculator or the savings goal calculator. For interest that never compounds, use the simple interest calculator.
Checked against: 12 CFR 1030 Appendix A, Part I.A, example (2): interest $30.37, APY 6.18%
Checked against: calculator.net CD calculator default inputs (10,000, 5%, 3 years, annually) and its published result, $11,576.25 and $1,576.25 interest
Checked against: 12 × (1.05^(1/12) − 1) = 4.888949 %; one year at 5% APY is 10,500 by definition
Checked against: r = 365 × (1.04^(1/365) − 1); penalty 10,000 × r × 3/12; 10,000 × 1.04^0.5 − penalty
Multiply the deposit by (1 + APR ÷ k) to the power k × years, where k is the compounding periods per year, and subtract the deposit. $10,000 at a 5% APR compounded yearly for 3 years grows to 10,000 × 1.05³ = $11,576.25, so the interest is $1,576.25. With the rate given as an APY, use (1 + APY) to the power of the years instead.
The APR is the stated yearly rate before compounding; the APY includes compounding and shows what $100 earns in a year. A 5% APY compounded monthly is an APR of 4.8889%, and a 6% APR compounded daily is an APY of 6.1831%. Regulation DD (Truth in Savings) requires banks to disclose both, and the APY is the one to compare CDs on.
Whatever the deposit agreement says, usually a number of months or days of interest. The federal minimum is in Regulation D: money withdrawn within six days of deposit must lose at least seven days' simple interest. On $10,000 at a 3.9223% APR, a 3-month penalty is 10,000 × 0.039223 × 3 ÷ 12 = $98.06.
Yes, when the penalty is larger than the interest earned so far. On $10,000 at 4% APY, one month earns $32.74, but a 3-month penalty is $98.06, so cashing out returns $9,934.68 and you lose $65.32 of your deposit. With these terms the penalty is covered after about 3 months.
Yes. The FDIC lists certificates of deposit among insured deposits, covered up to $250,000 per depositor, per insured bank, for each account ownership category. Coverage is principal plus interest accrued through the date the bank fails, so a $245,000 deposit at 4% APY passes the limit after about 6.2 months.
For planning only. Lenders, tax authorities and markets apply their own rounding, fees and rules; confirm figures with them before you commit.
This calculator includes 6 worked examples with independently sourced answers. They run in the test suite, and you can run them here too.