CD Calculator

balance at maturity = P × (1 + APY)^(term months ÷ 12) | amount received = P × (1 + APY)^(months held ÷ 12) − P × APY × (penalty months ÷ 12)

P

Amount deposited, in the currency you typed

APY

Annual percentage yield as a decimal, already including compounding

months held

Deposit term minus the months withdrawn early

penalty months

Months of interest the account agreement charges on withdrawal

Use it to compare two CDs quoting different APYs, or to put a number on taking your money out before the maturity date. Enter the penalty months exactly as your own account agreement states them: the default of three is an arbitrary starting point, not a rule, and the regulation that governs the disclosure is written as a penalty that will or may be imposed — so zero, for an account with no early withdrawal penalty, is a legitimate entry rather than a missing value.

1. Held to maturity

   1. Months held: 12 − 0 = 12.
   2. Growth factor: 1.045^(12 ÷ 12) = 1.045.
   3. Amount received: 10,000 × 1.045 = 10,450.00. The penalty does not apply, because the money stayed for the whole term.
   4. Interest kept: 10,450.00 − 10,000 = 450.00. The annualized return is the APY you entered, 4.5%.

   The penalty field is set but unused: withdrawing zero months early means no penalty is assessed, so the figure is ignored rather than subtracted.

2. Withdrawn three months early

   1. Months held: 12 − 3 = 9.
   2. Growth factor: 1.045^(9 ÷ 12) = 1.045^0.75 = 1.033564.
   3. Balance when you withdraw: 10,000 × 1.033564 = 10,335.64.
   4. Penalty: 10,000 × 4.5% × (3 ÷ 12) = 112.50.
   5. Amount received: 10,335.64 − 112.50 = 10,223.14, so interest kept is 223.14.
   6. Annualized return: (10,223.14 ÷ 10,000)^(12 ÷ 9) − 1 = 2.986%.

   The 112.50 penalty is exactly three months of interest on the deposit. What you actually lose against holding to maturity is 226.86, because the other 114.36 is interest that three extra months would have produced.

3. An account with no penalty, withdrawn six months early

   1. Months held: 12 − 6 = 6.
   2. Growth factor: 1.045^(6 ÷ 12) = 1.045^0.5 = 1.022252.
   3. Balance when you withdraw: 10,000 × 1.022252 = 10,222.52. Penalty is zero, so that is the amount received.
   4. Annualized return: (10,222.52 ÷ 10,000)^(12 ÷ 6) − 1 = 1.022252^2 − 1 = 4.5%.

   With no penalty the annualized return comes back to the APY exactly, however early you withdraw: halving the term and doubling the exponent cancel. The amount received is still smaller than at maturity — a shorter term at the same rate earns less money.

4. A five-year CD withdrawn one month before maturity

   1. Months held: 60 − 1 = 59.
   2. Growth factor: 1.06^(59 ÷ 12) = 1.06^4.916667 = 1.331743.
   3. Balance when you withdraw: 100,000 × 1.331743 = 133,174.32.
   4. Penalty: 100,000 × 6% × (6 ÷ 12) = 3,000.00.
   5. Amount received: 133,174.32 − 3,000.00 = 130,174.32, so interest kept is 30,174.32.
   6. Annualized return: (130,174.32 ÷ 100,000)^(12 ÷ 59) − 1 = 5.51%.

   A 3,000 penalty sounds severe next to the 112.50 in the previous example, but it is only a tenth of the interest earned. The longer the term, the smaller the penalty is relative to what the money made.

The penalty is a contract term, not a rule, and this page models one reading of it. Regulation DD requires the bank to disclose how the penalty is calculated, not to calculate it any particular way; the model here charges a set number of months of interest against the deposit, so an agreement that charges it against the interest already accrued, or that replaces the rate instead of subtracting a fee, will not match. The default of three months is a starting point to be replaced by whatever your agreement states. The withdrawal is modelled as a single point in time: partial withdrawals, or a sequence of them, are not handled. Interest is assumed to stay on deposit and compound for the whole holding period, which is the assumption the disclosed APY is required to state when interest may be withdrawn early. The APY is taken as given rather than checked against the institution's rate and compounding frequency, and no tax, no inflation and no comparison with any other product is modelled.

How is the early withdrawal penalty calculated?

According to your account agreement, and this page follows the most common shape: a stated number of months of interest charged against the deposit. Regulation DD requires the bank to disclose how the penalty is calculated rather than to use any particular formula, so the penalty months field is an input and not a constant. Set it to zero for an account with no early withdrawal penalty.

Why is the annualized return lower than the APY when I withdraw early?

Because the penalty is a fixed amount of money while the holding period has become shorter. Withdrawing three months early from a 10,000 deposit at 4.5% costs 112.50, and the remaining return is annualized over nine months rather than twelve, which reads 2.986% instead of 4.5%. The interest you keep falls further than the penalty alone suggests: the rest of the loss is interest the deposit never had time to earn.

Does the APY already include compounding?

Yes, and that is why this page asks for an APY and not a rate plus a compounding frequency. The annual percentage yield is defined as the total interest paid over a 365-day period, based on the interest rate and the frequency of compounding, so the compounding is already inside the number. Entering a nominal rate here and a frequency to go with it would fold it in twice.

Can the penalty leave me with less than I deposited?

It can, and the page shows it happening. Withdrawing with one month left on a twelve-month deposit pays a penalty larger than the interest those eleven months produced, so the amount received lands below the deposit and the interest line prints a negative number. That is the account agreement being applied, not an error in the arithmetic.

What if my CD pays the interest out during the term?

Then this calculation will not match exactly. The page assumes the interest stays on deposit and compounds for the whole holding period, which is the assumption a disclosed APY is required to state when interest may be withdrawn before maturity. An account that pays interest out as it is earned is a different arrangement from the one modelled here.

Does the page model anything after the maturity date?

No. It models one term at one rate. Whatever the institution does with the balance once the term ends, and any tax owed on the interest, are outside it.

• 12 CFR 1030.4(b)(6)(ii) — Early withdrawal penalties: a statement that a penalty will or may be imposed, how it is calculated, and the conditions for its assessment — Electronic Code of Federal Regulations (United States)
• 12 CFR 1030.2(c) — Annual percentage yield defined as the total interest paid over a 365-day period, based on the interest rate and the frequency of compounding — Electronic Code of Federal Regulations (United States)
• Certificates of Deposit (CDs) — the maturity date and any penalties for early withdrawal should be clearly stated — U.S. Securities and Exchange Commission, Investor.gov (United States)
• National Rates and Rate Caps — the posted national averages and caps that a quoted APY can be compared against — Federal Deposit Insurance Corporation (United States)