Calculate CD maturity value, compound interest, and early withdrawal penalty cost.
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Interest earned: $460
| Initial Deposit | $10,000 |
|---|---|
| Interest Earned | $460 |
| Maturity Value | $10,460 |
| Effective Annual Yield | 4.60% |
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CD interest compounds daily or monthly (varies by bank). Formula: A = P(1 + r/n)^(nt), where P = principal, r = annual rate, n = compounding periods per year, t = years. Most US banks compound daily.
Most CDs charge an early withdrawal penalty — typically 3 months of interest on 1-year CDs, 6 months on 3-5 year CDs. Penalty can exceed interest earned if you withdraw too early, meaning you lose principal.
FDIC weekly National Rate Cap tables track this. Currently 1-year CDs average 1.81% APY nationally, though top banks offer 4.5-5% APY. Check our live Fed funds data to see the broader rate environment.
Yes — FDIC insurance covers up to $250,000 per depositor per bank. Your money is safer than a traditional savings account because the rate is locked, not variable.
CD laddering (splitting money across multiple CDs with different maturity dates) gives you regular access to portions while earning on longer terms. Common: 20% in 1yr, 20% in 2yr, 20% in 3yr, 20% in 4yr, 20% in 5yr.
Every formula on this page traces to a federal agency, central bank, or peer-reviewed institution. We cite the rule-makers, not secondhand blogs.
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Result: Maturity value $10,517 — $517 interest earned
Per FDIC weekly National Rate Cap and Bankrate surveys, top 12-month CDs in 2025 sit near 5.0% (Marcus, Synchrony, Capital One, LendingClub Bank). That's ~60 bps above top HYSAs, a reasonable premium for 12-month illiquidity.
Result: Penalty: $562 (6 months interest) · Net: $26,260 vs $31,233 at maturity
Standard penalty for 1–5yr CDs is 6 months of interest per bank Truth-in-Savings disclosures. Leaving $4,973 of growth on the table underscores why CD laddering (see the CD Ladder calculator) beats one long-dated CD for liquidity needs.
Result: $15,591 at maturity — but can withdraw any time with full interest after 7 days
Marcus/Ally/CIT offer 'no-penalty' CDs at ~20–30 bps below standard CDs. For cash you might need during term, the small yield sacrifice is worth the optionality.
Per FDIC weekly National Rate Cap, the average 1-year CD is 1.81% while top online banks offer 5.0%. Always check Bankrate/NerdWallet before opening.
Impact: On $25,000 over 1 year: 1.81% vs 5.05% = $452 vs $1,298 — $846 left on the table for zero additional risk (both FDIC-insured).
Split deposits across multiple banks or use joint accounts (which get $500k coverage). Verify all accounts show on FDIC BankFind.
Impact: A 2023-style bank failure could leave uninsured balances fully at risk. The SVB / First Republic / Signature failures showed this isn't theoretical.
When the Fed is mid-hiking cycle, shorter CDs (6–12mo) preserve the option to reinvest at higher rates. Check FOMC dot plot before 5-year commitment.
Impact: A 5-year CD locked at 4% in 2022 missed the 2023–2024 rate peak of ~5.5% — compounded difference on $50k over 5yr = ~$4,200.
1-year T-bills at TreasuryDirect often match or beat CD rates and are state-tax-exempt. For residents of CA/NY/NJ (high state tax), the state-tax exemption adds 30–50 bps effective yield.
Impact: 5% CD vs 5% T-bill in CA: after 9.3% state tax on interest, CD yields 4.53% net vs T-bill's 5% — $47/year per $10k invested.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.