What's the difference between a CD and a regular savings account?

A CD locks in a fixed rate for a fixed term in exchange for typically higher interest than a standard savings account, but restricts access to your money until maturity without a penalty.

Is CD interest taxed?

Yes, in most cases CD interest is taxable income in the year it's earned, even if you don't withdraw it until maturity.

CD Calculator

Calculate how much a Certificate of Deposit (CD) will be worth at maturity, based on your deposit amount, APY, term, and compounding frequency.

Deposit amount

APY

Term

years

Maturity Value

$10,500.00

Interest Earned

$500.00

How It Works

Fixed-term compounding

A CD pays a fixed interest rate for a set term. Interest compounds at whatever frequency your bank uses (often daily or monthly), growing your original deposit into a larger maturity value.

No withdrawals until maturity

Unlike a regular savings account, a CD generally can't be added to or withdrawn from early without an early-withdrawal penalty — the math assumes your deposit sits untouched for the full term.

Example

A $10,000 deposit in a 5% APY CD held for 1 year grows to $10,500 at maturity — $500 in interest.

Common Mistakes

Comparing CDs by their stated interest rate instead of APY — APY already accounts for compounding frequency and is the true comparable rate.
Not factoring in the early-withdrawal penalty when deciding whether a CD's term length fits your actual savings timeline.

Frequently Asked Questions

What's the difference between a CD and a regular savings account?: A CD locks in a fixed rate for a fixed term in exchange for typically higher interest than a standard savings account, but restricts access to your money until maturity without a penalty.
Is CD interest taxed?: Yes, in most cases CD interest is taxable income in the year it's earned, even if you don't withdraw it until maturity.