CD Annual Percentage Yield (APY) Calculator
A CD APY Calculator helps you figure out how much interest you’ll actually earn on a Certificate of Deposit (CD), considering compound interest over a year. It's essential for comparing different banks, CD terms, and interest rates effectively.
🧠 What You Know:
- Interest Rate (r) – the nominal annual interest rate
- Compounding Frequency (n) – how often interest is added (monthly, quarterly, etc.)
You want to calculate the Annual Percentage Yield (APY) – the real return in one year.
🧮 Formula for CD Annual Percentage Yield (APY):
APY =
[(1 + r ÷ n)ⁿ − 1] × 100
Where:
- r = annual interest rate (as a decimal)
- n = number of compounding periods per year
✅ Example:
Annual Interest Rate = 5% (0.05)
Compounded Monthly = 12 times per year
→ APY = [(1 + 0.05 ÷ 12)¹² − 1] × 100
→ APY = [(1 + 0.004167)¹² − 1] × 100
→ = (1.05116 − 1) × 100
→ = 5.116%
📌 When to Use This:
Use the CD APY calculator when you:
- Compare CD accounts from different banks
- Decide between different compounding options (monthly vs. quarterly)
- Estimate total interest returns on your investment
- Understand real earnings on fixed-term deposits
❗ Common Mistakes to Avoid:
- Don’t confuse APY with APR – APY includes compounding, APR doesn’t
- Always convert percentage rates to decimals in the formula
- Match the correct compounding frequency (daily = 365, monthly = 12, etc.)
🔍 Trending FAQs Based on User Searches
1. How is APY different from interest rate?
APY reflects total yearly earnings, including compounding; the basic rate doesn’t.
2. What is a good APY for a 1-year CD?
As of 2025, anything above 5% is considered competitive.
3. How often do CDs compound?
Depends on the bank – monthly, quarterly, or annually are most common.
4. Is APY affected by early withdrawal?
Yes. If you withdraw early, you may lose interest or pay a penalty – reducing real yield.
5. Can I use this for savings accounts?
Yes – the formula works for any account with compound interest, including savings.