# Certificate of Deposit – Forbes Advisor

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Certificates of deposit (CDs) are a type of term savings account. With these products, you leave your money untouched for a fixed period. In exchange, you earn a fixed return on your primary investment.

Forbes Advisor’s free CD calculator can help you determine the interest you’ll earn by investing in a CD. You can also use it to compare CDs and other savings vehicles, helping you get the best bang for your buck.

## Certificate of Deposit (CD) Calculator

Tips on using our CD Calculator appear below, along with some FAQs. We also offer five things to consider when buying a CD.

## How to use this CD Calculator

To get the most out of this CD calculator, start by gathering the numbers you’ll need to input. You need four values:

• Initial deposit: the amount of money you plan to deposit
• Month: the duration or the duration of the CD
• Interest rate: the annual percentage yield (APY) that you will be paid
• Dialing frequency: how many times the CD interest is made up

After gathering the above information, enter it into the calculator. Once you click “calculate” you will get your full report.

Put into practice, say, for example, you plan to make an initial deposit of \$5,000. You find a 12 month CD with an interest rate of 0.75% compounded daily. According to the CD Calculator, after 12 months you will earn \$37.64 in interest and have a total of \$5,037.64 in your account.

If you’re considering another CD, enter its information into the calculator and see how it measures up. Keep this calculator handy when looking for the best CD rates, so you can determine which CD will give you the best return on investment.

## What to consider when choosing a CD

• Make APY (annual percentage return) a priority. CD yields are relatively unimpressive in the current low interest rate environment. It is therefore crucial to find the best possible return. Prioritize APY when shopping for CDs.
• Avoid early withdrawal penalties. If you withdraw money before the maturity date of the CD, you will usually have to pay an early withdrawal penalty. To get the best growth, choose a term that you can commit to without touching the money.
• Think carefully about the deposit amount. When deciding on your deposit amount, it is important that you consider your cash flow and how long you can go without your main deposit. Since CDs are term deposit accounts, banks and credit unions often charge early withdrawal penalties, as mentioned above.
• Choose a term that matches your goals. CDs come in a variety of lengths. Use your savings goals and cash flow needs to help you determine the term that’s right for you. Align the duration of the CD with when you will need access to your money.
• Don’t underestimate dialing frequency. The frequency of capitalization of CDs varies by bank and credit union. To maximize your returns, look for a CD compounded daily. The more frequently your interest is compounded, the more you earn.

Interest rates on savings deposits are quite low overall – it’s hard to find a high rate in this environment. Still, CDs provide security and a place to store short-term savings goals. If you don’t anticipate needing to access your funds for the duration of a CD, a CD might be a decent product for you. Before deciding on a CD, consider the pros and cons of using a certificate of deposit for your savings.

### How much interest can you earn on a CD?

The interest you can earn on a CD depends on the rate, term, deposit amount, and compounding frequency. Use the CD Calculator above to see how much you could earn.

Yes, CDs are considered safe investments. They are insured by the FDIC (Federal Deposit Insurance Corporation) with banks up to \$250,000 per depositor, per bank, for each category of account ownership, in the event of bank failure. The National Credit Union Administration (NCUA) insures CDs up to the same amount in federal credit unions and the majority of state-chartered credit unions.

### Can you lose money with a CD?

Generally, you will only lose money with a certificate of deposit if you withdraw your principal before the maturity date of the CD. The penalty for early withdrawals from banks and credit unions could eat up all of your interest income and, in some cases, some of your principal.

### Are there different types of CDs?

Yes, there are quite a few. The most common type of CD is known as a regular or traditional CD, but banks and credit unions may also offer other types, including booster CDs, booster CDs, CDs without penalty and expansion CDs. Within these categories, their terms can range from as little as seven days to as long as five years or more.