For illustrative purposes only. Actual CD terms, penalties, and APY may vary by institution.
A CD is a time deposit offered by banks and credit unions. You agree to keep your money on deposit for a set term—in return, the institution pays a fixed interest rate that's usually higher than a regular savings account.
The Annual Percentage Yield (APY) includes the effect of compounding, while the nominal interest rate does not. Our CD calculator uses APY so you see the true yearly return.
You'll pay an early‑withdrawal penalty, typically a few months of interest. Always check the bank's disclosure before opening a CD.
Yes—traditional CDs lock in a fixed rate until maturity, protecting you if market rates fall but preventing gains if they rise.
Compounding frequency varies by institution—common options are monthly, daily or annually. More frequent compounding yields slightly higher returns.
A no‑penalty CD lets you withdraw your full balance after a short lock‑up (e.g., 7 days) without paying the usual early‑withdrawal fee. Rates are usually a bit lower to compensate.
Yes—up to $250,000 per depositor, per bank, CDs are insured by the FDIC (or NCUA for credit unions), making them one of the safest fixed‑income investments.
Interest earned on CDs is taxed as ordinary income in the year it's credited—even if you leave the interest inside the CD until maturity.
A CD ladder splits your money across multiple CDs with staggered maturities (e.g., 1‑, 2‑, 3‑, 4‑, 5‑year). One CD matures every year, giving you regular access to cash while still locking most funds into higher long‑term rates.
High‑yield savings accounts offer rate flexibility and instant access, but the rate can drop at any time. CDs lock in a guaranteed return but tie up your funds. Use our CD calculator to compare today's high‑yield CD rates against your savings account APY.