CD interest compounds based on the frequency stated in the product terms. Most CDs compound daily or monthly. The standard formula is compound interest applied for the number of compounding periods in the term. If you want to compare how long your CD balance will fund withdrawals after maturity, use the Savings Duration Calculator.
APR and APY are not the same number. When comparing CDs, always use APY. The Truth in Savings Act requires banks to disclose APY on CDs so you can compare products accurately. The table below shows how much APY diverges from APR depending on compounding frequency at a 5% nominal rate.
| Compounding | APR | Effective APY | $10K Earns |
|---|---|---|---|
| Annually | 5.000% | 5.000% | $500.00 |
| Semi-annually | 5.000% | 5.063% | $506.25 |
| Quarterly | 5.000% | 5.095% | $509.45 |
| Monthly | 5.000% | 5.116% | $511.62 |
| Daily | 5.000% | 5.127% | $512.68 |
The difference between annual and daily compounding at 5% is only $12.68 on a $10,000 deposit over 12 months. The rate itself matters far more than the compounding frequency for short-term CDs.
Monthly CD interest is calculated by applying the monthly periodic rate to the current balance. Because interest compounds, each month earns slightly more than the previous. If you plan to reinvest CD earnings into a dividend reinvestment strategy, compare growth rates with the Dividend DRIP Calculator.
| Month | Balance | Interest This Month |
|---|---|---|
| 1 | $10,000.00 | $41.67 |
| 3 | $10,125.52 | $42.19 |
| 6 | $10,252.51 | $42.72 |
| 9 | $10,380.96 | $43.25 |
| 12 | $10,511.62 | $43.79 |
Earnings depend heavily on your term. Rates and earnings shown below assume a $10,000 deposit at representative 2026 high-yield online bank rates, compounding monthly. Use the calculator above to enter your exact rate. For how CD savings fit into a retirement plan, the Roth IRA Contribution Calculator shows how much you can contribute alongside a CD strategy.
| CD Term | Typical APY (2026) | Interest on $10K | Maturity Balance |
|---|---|---|---|
| 3 months | 4.50-5.20% | $112-$129 | $10,112-$10,129 |
| 6 months | 4.80-5.50% | $237-$270 | $10,237-$10,270 |
| 12 months | 4.50-5.30% | $450-$530 | $10,450-$10,530 |
| 18 months | 4.00-4.80% | $617-$743 | $10,617-$10,743 |
| 24 months | 3.80-4.50% | $776-$921 | $10,776-$10,921 |
| 36 months | 3.50-4.20% | $1,093-$1,319 | $11,093-$11,319 |
| 60 months | 3.20-4.00% | $1,730-$2,167 | $11,730-$12,167 |
Rates reflect online bank high-yield CD ranges as of 2026. Rates change frequently. Verify with the issuing bank before opening.
You deposit $10,000 in a 12-month CD at 5.0% APY, compounding monthly.
Researches and verifies the formulas, methodology, and source data behind each calculator on CalculatorFlux. All tools are built and checked against the cited references before publication.