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CD interest and value at maturity from the APY or interest rate, plus APY to APR conversion
CD value = deposit × (1 + APY)^(months ÷ 12). A $10,000 CD at 4% APY earns $400 in 12 months and $2,166.53 over 5 years. APY = (1 + rate ÷ n)^n − 1, so a 4% rate compounded daily equals a 4.081% APY. Taxes and early withdrawal penalties are not included.
A $10,000 CD at 4% APY earns $400.00 of interest in 12 months, $198.04 in 6 months and $2,166.53 over 5 years. At 5% APY the 12-month interest is $500.00. A 4% APY equals an interest rate of 3.922% with daily compounding. Formula: value at maturity = deposit × (1 + APY)^(months ÷ 12).
| APY | 6 months | 12 months | 2 years | 5 years | Rate, daily compounding |
|---|---|---|---|---|---|
| 1 % | $49.88 | $100.00 | $201.00 | $510.10 | 0.995% |
| 2 % | $99.50 | $200.00 | $404.00 | $1,040.81 | 1.98% |
| 3 % | $148.89 | $300.00 | $609.00 | $1,592.74 | 2.956% |
| 3.5 % | $173.49 | $350.00 | $712.25 | $1,876.86 | 3.44% |
| 4 % | $198.04 | $400.00 | $816.00 | $2,166.53 | 3.922% |
| 4.5 % | $222.52 | $450.00 | $920.25 | $2,461.82 | 4.402% |
| 5 % | $246.95 | $500.00 | $1,025.00 | $2,762.82 | 4.879% |
| 5.5 % | $271.32 | $550.00 | $1,130.25 | $3,069.60 | 5.354% |
| 6 % | $295.63 | $600.00 | $1,236.00 | $3,382.26 | 5.827% |
At 4% APY, $10,000 earns $400 in 12 months and $816 in 24 months. At 5% APY it earns $500 in a year. The table on this page lists more rates and terms.
Multiply the deposit by (1 + APY) raised to the term in years, then subtract the deposit. For $10,000 at 4% APY for 6 months: 10,000 × 1.04^0.5 − 10,000 = $198.04.
The APR or interest rate is the yearly rate without compounding. The APY includes compounding and shows the actual yearly return. A 5% rate compounded monthly equals an APY of 5.116%.
Use rate = n × ((1 + APY)^(1 ÷ n) − 1), with n compounding periods per year. A 5% APY with monthly compounding equals an interest rate of 4.889%.
Not the deposit itself at an FDIC- or NCUA-insured institution, within the $250,000 coverage limit. An early withdrawal penalty can cost part of the interest, and brokered CDs can lose value if sold before maturity.
A certificate of deposit (CD) pays a fixed rate for a fixed term. US banks and credit unions quote the rate as APY (annual percentage yield), which already includes compounding. The value at maturity is deposit × (1 + APY)^(months ÷ 12). A $10,000 CD at 4% APY is worth $10,400 after 12 months, so it earns $400 of interest. After 6 months it has earned $198.04, and a 5-year CD at the same APY earns $2,166.53.
The interest rate, also called the nominal rate and on loans the APR, does not include compounding. The APY shows what you actually earn in a year once interest is added to the balance: APY = (1 + rate ÷ n)^n − 1, where n is the number of compounding periods per year. A 4% rate compounded daily gives an APY of 4.081%, compounded monthly 4.074% and quarterly 4.060%. The other way round, a 4% APY equals a rate of 3.922% with daily compounding. The APY ↔ interest rate tab converts in both directions.
Common terms range from 3 months to 5 years. A longer term locks in the rate for longer, but the money is tied up. A CD ladder splits the deposit across several terms, for example 1, 2, 3, 4 and 5 years, so part of the money becomes available every year while the rest keeps earning.
CDs at FDIC-insured banks are insured up to $250,000 per depositor, per insured bank, for each account ownership category. Share certificates at federally insured credit unions are covered by the NCUA up to the same amount. Brokered CDs can lose value if you sell them before maturity.