In Short
APY (annual percentage yield) is the total interest paid in a year as a percentage of the deposit, including compounding [1]. A 4.5% rate compounded daily is a 4.602% APY. $25,000 in an 18-month CD at 4% APY earns $1,514.90 at maturity. Deposits are FDIC-insured up to $250,000 per depositor, per insured bank, per ownership category [4].
How to Use the APY & CD Calculator
- Pick a mode: APY from an interest rate, or CD earnings from an APY.
- Enter your deposit and the term in months.
- For APY, enter the stated rate and how often it compounds. For a CD, enter the APY and the early withdrawal penalty in months of interest.
- Or tap Say It All: “I deposit 10,000 at 4.5 percent compounded daily for 12 months.”
The Formula
Regulation DD defines APY as the yearly interest including compounding over a 365-day period, and gives the general formula banks use [1][2]. With the rate and the compounding frequency you can work it out directly.
- APY = (1 + rate ÷ n)^n − 1, where n = compounding periods a year (365 daily, 12 monthly)
- Regulation DD: APY = 100 × [(1 + interest ÷ principal)^(365 ÷ days in term) − 1]
- CD interest = deposit × ((1 + APY)^(months ÷ 12) − 1)
- Early withdrawal penalty (estimate) = deposit × APY × penalty months ÷ 12
Worked Examples
| Scenario | Inputs | Result |
|---|---|---|
| High-yield savings | 4.5% compounded daily | APY 4.602%: $10,000 earns $460.25 in a year |
| Monthly compounding | 5% compounded monthly | APY 5.116% |
| One-year CD | $10,000 at 4.25% APY for 12 months, 3-month penalty | $425 interest · $10,425 at maturity · early exit about $106.25 |
| 18-month CD | $25,000 at 4% APY, 6-month penalty | $1,514.90 interest · $26,514.90 at maturity · early exit about $500 |
| Regulation DD worked example | $30.37 interest on $1,000 for a 182-day CD | APY 6.18% [2] |
Illustrative examples, not projections. Figures use the tax year shown and the assumptions above.
What Is the Difference Between APY and Interest Rate?
The interest rate is the yearly rate before compounding. APY includes compounding: interest earned on interest during the year. Under Truth in Savings rules, banks must quote APY so savers can compare accounts that compound differently [1]. The more often interest compounds, the higher the APY at the same rate: 5% is a 5.116% APY compounded monthly and 5.127% compounded daily.
How Is CD Interest Calculated?
A certificate of deposit holds a fixed amount for a fixed time, such as six months, one year or five years, and the bank pays interest in exchange [5]. Held to maturity at a steady APY, the interest is the deposit × ((1 + APY)^(months ÷ 12) − 1). $50,000 at 3.8% APY for 5 years earns $10,249.96.
If you take the money out early, the bank can charge a penalty, often a set number of days' or months' interest. Banks must disclose how the penalty is calculated and when it applies [3]. The calculator shows an example penalty; check your own CD's terms.
How Much of My Deposit Is FDIC-Insured?
The FDIC insures deposits up to $250,000 per depositor, per ownership category, at each FDIC-insured bank [4]. A CD bought through a federally insured bank is covered too; the limit counts all your accounts in the same ownership category at that bank, not each CD separately [5]. The calculator flags a balance that would pass $250,000.
Frequently Asked Questions
What is the APY on 5% compounded daily?
About 5.127%. Compounded monthly it is 5.116%, and compounded once a year it is 5%.
How much interest does $10,000 earn in a 12-month CD at 4.25% APY?
$425, for $10,425 at maturity, as long as the rate holds and nothing is withdrawn.
What is the penalty for cashing a CD early?
Each bank sets its own and must disclose it, often a number of months of interest [3]. On $25,000 at 4% APY, a 6-month interest penalty is about $500.
Is APY the same as APR?
No. APR is the yearly rate without compounding. APY includes compounding, so it is the better number for comparing savings accounts and CDs [1].
Is a CD over $250,000 insured?
FDIC insurance covers up to $250,000 per depositor, per insured bank, per ownership category [4]. Amounts above that in the same category at one bank are not insured.
Sources
- Regulation DD (Truth in Savings), § 1030.2 Definitions: annual percentage yield — Consumer Financial Protection Bureau
- Regulation DD, Appendix A: Annual Percentage Yield Calculation — Consumer Financial Protection Bureau
- Regulation DD, § 1030.4(b)(6)(ii): Early withdrawal penalties — Consumer Financial Protection Bureau
- Understanding Deposit Insurance — Federal Deposit Insurance Corporation
- Certificates of Deposit (CDs) — U.S. Securities and Exchange Commission (Investor.gov)
Official sources only: the IRS, SSA, BLS and other government agencies. Read how Zentavos researches.