CD Calculator: Compare Two CDs and the Early Penalty

How the CD figures are calculated

Banks quote a CD by its APY, the annual percentage yield. That is the percentage a deposit grows by in one year when the interest is left in. The calculator does four sums.

Value at maturity. Maturity is the day the term ends.
Value = deposit × (1 + APY)^(months ÷ 12)
For a 6-month CD at 4.00% APY, $10,000 becomes $10,198.04, not $10,200. Half a year earns a little less than half the APY because the APY includes compounding over a full year.
Both CDs over the same time. A 12-month CD and a 36-month CD cannot be compared at their own maturity dates. So the calculator runs both for the longer term and assumes the shorter one is renewed at its own APY each time it ends. That is an assumption. Nobody knows what rate a bank will offer at renewal.
The renewal rate that makes them equal. This is the APY the shorter CD would need for the months that are left to finish level with the longer one.
Break-even APY = (longer CD value ÷ shorter CD value)^(12 ÷ months left) − 1
The cost of leaving early. You enter the penalty as a number of months of interest.
Penalty = months of penalty × deposit × ((1 + APY)^(1/12) − 1)
The payout is the deposit, plus the interest earned so far, minus the penalty.

Worked examples

The APYs in these examples are made up to show the maths. They are not rates on offer today.

A 12-month CD at 4.00% against a 36-month CD at 3.50%

$10,000 in each. The shorter CD has the higher APY, so it is ahead if it can be renewed at the same rate twice.

CD A at maturity (1 year)$10,400.00
CD B at maturity (3 years)$11,087.18
CD A after 3 years, renewed at the same APY$11,248.64
CD B after 3 years$11,087.18
APY the shorter CD needs at renewal to finish level3.25%
CD A ahead by$161.46

A 6-month CD at 3.25% against a 60-month CD at 4.25%

$25,000 in each. Here the longer CD pays more, and the shorter one would need a much better rate at renewal to catch up.

CD A at maturity (6 months)$25,403.00
CD B at maturity (5 years)$30,783.67
CD A after 5 years, renewed at the same APY$29,335.28
CD B after 5 years$30,783.67
APY the shorter CD needs at renewal to finish level4.36%
CD B ahead by$1,448.38

Leaving a 24-month CD after 2 months

$10,000 at 4.00% APY with a penalty of 6 months of interest. The penalty is larger than the interest earned, so part of the deposit is lost.

Interest earned in 2 months$65.58
Penalty (6 months of interest)−$196.42
Taken from the original deposit$130.84
Interest given up compared with staying to maturity$946.84
Paid out$9,869.16

Interest on a $10,000 CD by APY and term

Use this table to check a quote. For a different deposit, scale the figure. A $5,000 CD earns half of what is shown and a $25,000 CD earns two and a half times as much.

Interest at maturity on a $10,000 deposit, with interest left in the CD. The APYs are examples for the maths, not current market rates.
APY	6 months	1 year	2 years	5 years
2.00%	$99.50	$200.00	$404.00	$1,040.81
2.50%	$124.23	$250.00	$506.25	$1,314.08
3.00%	$148.89	$300.00	$609.00	$1,592.74
3.50%	$173.49	$350.00	$712.25	$1,876.86
4.00%	$198.04	$400.00	$816.00	$2,166.53
4.50%	$222.52	$450.00	$920.25	$2,461.82
5.00%	$246.95	$500.00	$1,025.00	$2,762.82
5.50%	$271.32	$550.00	$1,130.25	$3,069.60
6.00%	$295.63	$600.00	$1,236.00	$3,382.26

What a CD is

The US Securities and Exchange Commission describes a certificate of deposit as a savings account that holds a fixed amount of money for a fixed period of time, such as six months, one year or five years. In return the bank pays interest. When the term ends you get back the money you put in plus the interest.

The trade is access for certainty. You agree to leave the money alone, and the bank agrees to the rate. Credit unions offer the same product under the name share certificate.

Before you open a CD, the bank has to give you a disclosure that states:

the APY and the interest rate
how often interest is compounded and credited
the maturity date
whether a penalty applies for early withdrawal, how it is calculated and when it is charged
whether the CD renews automatically at maturity

Deposit insurance

CDs at FDIC-insured banks are covered by federal deposit insurance. The standard amount is $250,000 per depositor, per insured bank, for each account ownership category. It covers the principal and any interest that has built up, to the date the bank fails. Coverage is automatic when you open the account.

The limit applies to your deposits at one bank added together, not to each CD. Two $200,000 CDs in your name alone at the same bank total $400,000, which is over the limit. Accounts in a different ownership category, such as a joint account, are counted separately.

At a federally insured credit union, share certificates are covered up to $250,000 by the National Credit Union Share Insurance Fund, which is backed by the full faith and credit of the United States.

Early-withdrawal penalties

Each bank sets its own penalty and must disclose it. There is no standard figure to assume, so read the disclosure for the CD you are looking at and enter that number in the calculator.

Federal law sets a floor only. Under the Federal Reserve's Regulation D, an account counts as a time deposit only if money withdrawn within the first 6 days after deposit carries a penalty of at least 7 days' simple interest. Regulation DD, the disclosure rule, defines a time account in the same way. That is a minimum. The penalty in your CD's disclosure can be larger and can apply for the whole term.

Three things to check in the disclosure:

What the penalty is measured in. Days or months of interest, and on what amount.
Whether it can reach your deposit. If you leave before you have earned as much interest as the penalty, the difference comes out of your principal.
Whether you can take interest out as it is paid. The APY assumes interest stays in until maturity. Taking it out reduces what you earn.

Tax on CD interest

CD interest is taxed like other bank interest: it is added to your other income and taxed at your usual federal rates. The bank reports it on Form 1099-INT when it comes to $10 or more in a year. Two points are particular to CDs.

First, timing. The IRS taxes interest in the year it becomes available to you, such as when it is credited to an account you can withdraw from without penalty. That is not always the year the CD ends. For a CD longer than a year that pays everything at maturity, part of the interest may have to be reported each year. The bank reports that on Form 1099-OID.

Second, penalties. If you pay an early-withdrawal penalty, the bank shows it in box 2 of Form 1099-INT. You report the full interest and can deduct the penalty from your gross income. You must report all taxable interest even if no form arrives, and states may tax it too.

What the result leaves out

Tax. No federal or state tax is deducted.
Real renewal rates. The comparison renews the shorter CD at its own APY. The real rate could be higher or lower.
Your bank's exact penalty method. The calculator uses months of interest on the full deposit. A bank may use days instead, or apply the penalty only to the amount withdrawn.
Special CD types. CDs with rates that step up or vary, CDs the bank can end early, and CDs sold through brokers have terms this calculator does not model.
Day counts. A month is treated as one twelfth of a year. A bank counts the actual days in the term, so its interest figure can differ from this one by a small amount.
Inflation. The value at maturity is in future dollars.

Common mistakes

Comparing interest in dollars across different terms. A 5-year CD nearly always shows more interest than a 1-year CD, because it runs five times as long. Compare APYs, or use the same time for both as this calculator does.
Halving the APY for a 6-month CD. It is close, but the right sum uses the power of one half.
Assuming the rate will be there at renewal. It is a new rate each time.
Counting $250,000 of insurance per CD. The limit is per depositor, per bank, per ownership category.
Forgetting the maturity date. If the CD renews automatically, you may be locked in again with a new penalty period.

Questions people ask

How much interest does a $10,000 CD earn in a year?

Multiply the deposit by the APY. A 12-month CD at 4.00% APY earns $400.00 on $10,000. At 3.00% APY it earns $300.00. These APYs are examples, not current rates.

How is a CD early-withdrawal penalty calculated?

Each bank writes its own rule, for example a set number of days or months of interest. Federal rules require the bank to tell you that a penalty applies, how it is calculated and when it is charged, before you open the account.

Can an early-withdrawal penalty take some of my deposit?

Yes, if the penalty is larger than the interest you have earned so far. IRS Form 1099-INT has a box for "interest or principal forfeited" on an early withdrawal, which shows that principal can be lost.

Are CDs insured?

Yes, up to a limit. A CD at an FDIC-insured bank, or a share certificate at a federally insured credit union, is covered up to $250,000. The limit counts all your deposits at that bank in the same ownership category, not each CD.

Do I pay tax on CD interest before the CD matures?

You can. CD interest is taxable income in the year it becomes available to you, which is not always the year the CD ends. For a CD of more than one year that pays everything at maturity, part of the interest may have to be reported each year.

Is a longer CD always better?

No. Over the same stretch of time, the CD with the higher APY earns more, whatever its term. A longer CD locks in its rate, which helps if rates fall and hurts if they rise.

What happens when a CD matures?

You can take the money or put it in a new CD. Some CDs renew automatically. The bank must tell you in its disclosures whether yours does, so check before the maturity date.

What is the difference between a CD rate and its APY?

The interest rate does not include compounding. The APY does, and it assumes the interest stays in the CD until maturity. Compare CDs by APY.

Sources

Figures last checked against these sources on October 10, 2026. This page gives general information and estimates, not tax, legal or financial advice.