See how much interest a certificate of deposit (CD) will earn by the time it matures, what the rate means as an APY or an interest rate, and what an early withdrawal could cost. A $10,000 12-month CD paying 4.00% APY earns $400.00, leaving $10,400.00 at maturity. With daily compounding that APY works out to an interest rate of 3.92%, and a three-month interest penalty for cashing out early would be about $98.06.
CD Calculator
Interest, APY and early withdrawal penalty · Updated October 13, 2026
- Balance at maturity
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- APY
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- Interest rate (before compounding)
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- Penalty if you cash out early
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- Interest after federal income tax
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The penalty is estimated as simple interest on the deposit. State income tax is not included.
How CD interest is calculated
- Interest = deposit × [(1 + APY)months ÷ 12 − 1]
- APY from an interest rate = (1 + rate ÷ n)n − 1, where n is the number of times interest compounds per year (365 for daily, 12 for monthly).
- Interest rate from an APY = n × [(1 + APY)1 ÷ n − 1]
Banks have to quote CD yields as an annual percentage yield (APY) under the Truth in Savings Act. Regulation DD defines it as 100 × [(1 + interest ÷ principal)365 ÷ days in term − 1], so the APY already includes the effect of compounding. That makes APY the fairest way to compare CDs from different banks, and it’s why the compounding setting only matters here when you enter an interest rate instead of an APY.
| Term | Interest at 4.00% APY | Balance at maturity |
|---|---|---|
| 3 months | $98.53 | $10,098.53 |
| 6 months | $198.04 | $10,198.04 |
| 12 months | $400.00 | $10,400.00 |
| 18 months | $605.96 | $10,605.96 |
| 24 months | $816.00 | $10,816.00 |
| 36 months | $1,248.64 | $11,248.64 |
| 60 months | $2,166.53 | $12,166.53 |
What CDs pay right now
The FDIC publishes national average deposit rates every month. In its release of September 21, 2026 (based on rates at the end of August), the averages were:
| Account | National average rate |
|---|---|
| Savings | 0.37% |
| Money market | 0.63% |
| 6-month CD | 1.41% |
| 12-month CD | 1.73% |
| 24-month CD | 1.61% |
| 36-month CD | 1.36% |
| 60-month CD | 1.38% |
Averages hide a wide spread: the same release lists a 12-month Treasury yield of 4.16%, far above the average CD. At the 1.73% average, $10,000 would earn about $173 in a year, compared with $400 at 4.00% APY, so it pays to compare offers from several banks and credit unions before you lock in.
Early withdrawal penalties
- Each bank sets its own penalty, usually a number of days’ or months’ interest, so read the account disclosure before you open a CD.
- Federal rules require at least seven days’ simple interest as a penalty on money withdrawn within the first six days after the deposit (Regulation D).
- The penalty can be larger than the interest earned so far. If you withdraw soon after opening the CD, it can come out of your original deposit.
- You can deduct an early withdrawal penalty on your federal return (Schedule 1 of Form 1040); the bank shows it separately on Form 1099-INT.
Taxes and deposit insurance
- CD interest is taxable as ordinary income. Banks send Form 1099-INT when they pay you $10 or more of interest in a year, but you must report all interest even without the form.
- You generally pay tax on the interest each year as it is earned, not just when the CD matures. The calculator shows the interest left after your federal bracket; state income tax may also apply.
- Deposits at FDIC-insured banks, including CDs, are covered up to at least $250,000 per depositor, per bank, for each ownership category. Credit union certificates are insured separately by the NCUA.
FAQ
What’s the difference between APY and the interest rate?
The interest rate is the yearly rate before compounding. The APY adds in the interest earned on interest during the year, so it is always equal to or a little higher than the rate. A 4.00% rate compounded monthly gives an APY of 4.07%.
Does it matter how often a CD compounds?
Only a little, and only if you compare interest rates. Once you compare APYs, compounding is already built in, so a 4.00% APY earns the same whether the bank compounds daily or monthly.
What happens when my CD matures?
Many CDs renew automatically for the same term at the bank’s rate on that day. For most automatically renewing CDs longer than a month, the bank must send you a notice before maturity. Check the grace period and move the money if the new rate isn’t competitive.
Is a CD better than a high-yield savings account?
A CD locks in a rate for the whole term, which helps if rates fall, but you pay a penalty to get your money early. A savings account lets you withdraw at any time, but its rate can change. Many savers keep emergency money in savings and use CDs for cash they won’t need until a set date.
Related calculators
- Compound Interest CalculatorSavings growth with monthly deposits
- Federal Income Tax Calculator 2026Find your tax bracket
- 401(k) Contribution Calculator 2026Save for retirement with a match
Sources
- FDIC: National rates and rate caps · September 21, 2026 release
- CFPB: Regulation DD (Truth in Savings), Appendix A, annual percentage yield
- eCFR: 12 CFR 204.2, definition of time deposit (Regulation D)
- IRS: Topic 403, Interest received
- IRS: Publication 550, Investment income and expenses
- FDIC: Understanding deposit insurance
Figures current as of October 13, 2026
Each formula is checked against a separate test sheet with at least three worked examples. Results are estimates based on the numbers you enter and the published rules; your actual figures may differ. This is general information, not financial or tax advice.
Spotted a mistake? Contact us and we will fix it and update the date above.