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Certificate of Deposit (CD) Calculator

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years

Leave it as zero if you want to calculate before tax interest only.

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Only used for calcualting inflation adjusted end balance.

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Calculated Results
Total Interest6,765
End Balance26,765
Infaltion Adjusted End Balance23,087
End Principal20,000
Interest Investment Portfolio Performance Return

Balance and Interest

Year Begin Principal Begin Balance Interest End Principal End Balance
1 20,000 20,000 1,200 20,000 21,200
Month120,00020,00010020,00020,100
Month220,00020,10010020,00020,200
Month320,00020,20010020,00020,300
Month420,00020,30010020,00020,400
Month520,00020,40010020,00020,500
Month620,00020,50010020,00020,600
Month720,00020,60010020,00020,700
Month820,00020,70010020,00020,800
Month920,00020,80010020,00020,900
Month1020,00020,90010020,00021,000
Month1120,00021,00010020,00021,100
Month1220,00021,10010020,00021,200
2 20,000 21,200 1,272 20,000 22,472
Month1320,00021,20010620,00021,306
Month1420,00021,30610620,00021,412
Month1520,00021,41210620,00021,518
Month1620,00021,51810620,00021,624
Month1720,00021,62410620,00021,730
Month1820,00021,73010620,00021,836
Month1920,00021,83610620,00021,942
Month2020,00021,94210620,00022,048
Month2120,00022,04810620,00022,154
Month2220,00022,15410620,00022,260
Month2320,00022,26010620,00022,366
Month2420,00022,36610620,00022,472
3 20,000 22,472 1,348 20,000 23,820
Month2520,00022,47211220,00022,584
Month2620,00022,58411220,00022,697
Month2720,00022,69711220,00022,809
Month2820,00022,80911220,00022,921
Month2920,00022,92111220,00023,034
Month3020,00023,03411220,00023,146
Month3120,00023,14611220,00023,259
Month3220,00023,25911220,00023,371
Month3320,00023,37111220,00023,483
Month3420,00023,48311220,00023,596
Month3520,00023,59611220,00023,708
Month3620,00023,70811220,00023,820
4 20,000 23,820 1,429 20,000 25,250
Month3720,00023,82011920,00023,939
Month3820,00023,93911920,00024,059
Month3920,00024,05911920,00024,178
Month4020,00024,17811920,00024,297
Month4120,00024,29711920,00024,416
Month4220,00024,41611920,00024,535
Month4320,00024,53511920,00024,654
Month4420,00024,65411920,00024,773
Month4520,00024,77311920,00024,892
Month4620,00024,89211920,00025,011
Month4720,00025,01111920,00025,130
Month4820,00025,13011920,00025,250
5 20,000 25,250 1,515 20,000 26,765
Month4920,00025,25012620,00025,376
Month5020,00025,37612620,00025,502
Month5120,00025,50212620,00025,628
Month5220,00025,62812620,00025,755
Month5320,00025,75512620,00025,881
Month5420,00025,88112620,00026,007
Month5520,00026,00712620,00026,133
Month5620,00026,13312620,00026,260
Month5720,00026,26012620,00026,386
Month5820,00026,38612620,00026,512
Month5920,00026,51212620,00026,638
Month6020,00026,63812620,00026,765
How to calculate the interest income on a Certificates of Deposit (CD)

Certificates of Deposit (CD) carry a fixed interest rate for a fixed term. For simple interest rate, the interest is calcualted by using the principal balance times the interest rate. \[ Interest = Principal \times Rate \] For compounding interest rate, the compounding frequency determine when the interest will be converted into principal. For example, if the compounding frequency is annual, then at the year end, the total interest for that year will become principal. Therefore, for the next year, the principal will increase by that interest amount and that will result a hight interest income for the next year. Because of that, the compounding frequency will impact the end total interest amount and thus total balance. The more frequently the compounding, the higher the interest.

Are Certificates of Deposit Worth It Right Now

CDs are seen as safe bets for saving or investing since they are federally insured and returns are guaranteed. And CD normally bear an interest rate that is higher than saving accounting in a bank. However, just because CDs tend to offer some of the highest guaranteed returns does not automatically make them the best home for your savings or investments. CD work well in the following scenarios:

  • Protecting Savings: If you are saving for a down payment such as car or home, it is better to put the cash into a CD than leave it in the bank account. Because you will not need the money in a short period of time, and can stay safely out of reach in CD.
  • Timing the market:If you waiting for a better entry point into the other kinds of investment such as stock market, during that waiting period, you can put the money into a CD. Or if you want to use a cost average investment strategy, you can put the initial fund into CD and draw down it gradually into investment.
  • Riskless return:Invest in long term CD is generally the best option for riskless investment for people who do not want to or can not take risk such as retired people.
CDs on the other hand have some drawbacks:
  • Early Withdraw Penalties: If you need money before the maturity date of the CD, you can withdraw it before the term mature. However, there will normally be a penalty that makes the interest rate not as high as originally expected.
  • Locked In Rate: If the interest rate is increasing, you will miss the higher rate opportunity later on if you put your money into a CD. However, if the interest rate is dropping, your locked in rate will make it an even better investment. Therefore, predicting the future interest rate movement will help you determine if you should put your money into a CD or not.