A Certificate of Deposit (CD) pays a fixed APY for a defined term — typically 3 months to 5 years. Interest compounds at a set frequency (usually daily or monthly), and you receive your principal plus all accumulated interest at maturity.
The calculation follows the standard compound interest formula: A = P × (1 + r/n)nt, where P is your principal, r is the annual rate, n is the compounding periods per year, and t is the term in years. For a $25,000 CD at 4.10% APY with monthly compounding over 12 months, the maturity value is $26,046 — $1,046 in interest.
The most important variable after rate is compounding frequency. Daily compounding produces slightly more than monthly at the same APY. Always verify the exact maturity value before committing — the calculator above does that math instantly for any amount, rate, and term.
What happens to my CD at maturity?
Most CDs automatically renew for the same term at whatever rate is current at that time — which may be significantly lower than your original rate. Set a calendar reminder for your maturity date so you can compare rates before it rolls over.
Is CD interest taxable?
Yes. CD interest is taxed as ordinary income in the year it is credited, even on multi-year CDs where you haven’t received the funds yet. Your bank will issue a 1099-INT each year interest is credited to your account.
What CD term offers the best rate right now?
In May 2026, 12-month CDs from top online banks offer the best available APY — typically 4.00–4.20%. Compare your options at Bankrate or DepositAccounts.com, then verify the actual maturity value here before opening an account.
Can I withdraw from a CD early?
Yes, but most CDs charge an early withdrawal penalty of 3–12 months of interest. On a 2-year CD, breaking early could erase most of your earned interest. No-penalty CDs exist but typically offer lower rates in exchange for the flexibility.