The Certificate of Deposit (CD) Calculator can help you determine accumulated interest earnings on CDs over time. It also includes considerations for tax and inflation for more accurate results.
What is a Certificate of Deposit?
A certificate of deposit (CD) is simply an agreement that helps deposit money for a fixed period of time that will in return pay interest. Common term deposits range anything between three months to five years. The lengthier the term, the higher is the exposure to interest rate risk and fluctuations.
Generally, the larger the initial deposit is, or the longer the investment period, the higher is the interest rate. As a type of investment, CDs usually fall on the low-risk and low-return end of the spectrum.
Usually, interest rates of CDs are higher than the rates of savings accounts and money markets, but are lower than the historical average return rate of equities and stocks.
There are also different types of CDs with varying rates of interest, or rates linked to indexes of various kinds, but the calculator can only do calculations based on fixed rate CDs.