How CD interest is calculated
CD interest is calculated by compounding the rate over the term: value at maturity = deposit × (1 + APY)t, where t is the term in years. Banks must disclose the APY, which already reflects compounding, so it is the number to use.[3]
A 12-month CD at 4.20% APY on $10,000: 10,000 × 1.0420 = $10,420.00. A 6-month CD at the same APY earns about half as much, $207.84, because it runs for half a year; APY is always stated as an annual figure.
If your CD quotes an interest rate and a compounding method instead, choose "Interest rate (APR)". Regulation DD's formula, APY = 100 × [(1 + interest ÷ principal)365/days − 1], links the two for any term.
National average CD rates
The FDIC's national rate is the deposit-weighted average rate paid by insured banks and credit unions. The national rate cap, the higher of the national rate plus 0.75 point or 120% of a similar Treasury yield plus 0.75 point, limits only banks that are less than well capitalized.[1][2] As published October 19, 2026 (data as of September 30, 2026):
| CD term | National rate | Rate cap | Interest on $10,000 at the national rate |
|---|---|---|---|
| 3-month | 1.14% | 5.79% | $28.38 |
| 6-month | 1.39% | 5.95% | $69.26 |
| 12-month | 1.76% | 6.20% | $176.00 |
| 24-month | 1.55% | 6.61% | $312.40 |
| 36-month | 1.39% | 6.75% | $422.82 |
| 48-month | 1.31% | 6.75% | $534.39 |
| 60-month | 1.41% | 6.86% | $725.16 |
Averages include many banks that pay far less than online banks and credit unions, so a competitive CD often pays well above the national rate. CD rates also follow the Federal Reserve: the federal funds target range has been 3.75% to 4.00% since September 16, 2026 and was held there on October 28, 2026.[7]
CD early withdrawal penalty
An early withdrawal penalty is usually a set number of days or months of simple interest, defined in the account agreement your bank must give you.[5] Federal rules set only a floor: money withdrawn within six days of deposit must lose at least seven days' simple interest.[4] Above that, banks choose. For a 5-year CD at 4.40% APY broken after one year:
| Penalty | Penalty in dollars | You receive | Result |
|---|---|---|---|
| 90 days of interest | $101.45 | $10,318.55 | $318.55 gain |
| 180 days | $202.90 | $10,217.10 | $217.10 gain |
| 12 months | $411.44 | $10,008.56 | $8.56 gain |
| 24 months | $822.89 | $9,597.11 | $402.89 less than deposited |
A large penalty early in the term can exceed the interest earned so far and dip into your deposit; the calculator flags this. Breaking a 24-month CD after 4 months with a 180-day penalty, for instance, returns $9,935.18 on $10,000. The CD early withdrawal penalty calculator tests any month and penalty.
Should I break my CD for a higher rate?
Breaking a CD pays only if the new rate, over the remaining term, earns back the penalty. Enter "Withdraw after" and "Reinvest at APY": the calculator compares the two paths and shows the break-even APY above which breaking the CD comes out ahead. When rates are rising, a CD ladder lets part of your money renew at new rates without penalties.
CD vs savings account vs Treasury bill
- Savings and money market accounts pay a variable rate but let you withdraw; compare with the high-yield savings calculator.
- Treasury bills are exempt from state and local income tax, which can make a slightly lower yield worth more after tax; see the T-bill calculator.
- Insurance. CDs at insured banks are covered by the FDIC up to $250,000 per depositor, per bank, per ownership category.[6]
Before you open a CDCheck the APY, the term, how interest is paid (monthly or at maturity), the early-withdrawal penalty and what happens at maturity: many CDs renew automatically for the same term at the then-current rate.
Related calculators
- CD ladder calculatorRungs, blended APY and the ladder against a single CD
- APY calculatorAPR to APY and back, for any compounding
- High yield savings account calculatorYour APY against the FDIC national average, in dollars
- T-bill calculatorPrice, investment rate and the state-tax edge over a CD
Frequently asked questions
How do you calculate interest on a CD?
Multiply the deposit by (1 + APY) raised to the term in years and subtract the deposit. $10,000 at 4.20% APY for 12 months earns $420.00.
How much will a $10,000 CD earn in a year?
$420.00 at 4.20% APY and $176.00 at the FDIC national average 12-month rate of 1.76%.
What is the penalty for withdrawing a CD early?
It is set by your bank and stated in the account agreement, commonly a number of days or months of interest that grows with the term. The federal minimum is seven days of simple interest for withdrawals within six days of deposit.
Can you lose money in a CD?
Not at maturity at an insured bank within insurance limits. You can get back less than you deposited if an early-withdrawal penalty is larger than the interest earned so far.
Are CD rates going up or down?
CD rates tend to follow the Federal Reserve's policy rate and Treasury yields. The national rate table above is updated monthly from the FDIC; the latest change is noted with the publication date (October 19, 2026).
Sources
- National Rates and Rate Caps, October 2026
- 12 CFR 337.7, Interest rate restrictions (national rate and national rate cap)
- Appendix A to Part 1030 (Regulation DD), Annual Percentage Yield Calculation
- 12 CFR 204.2, Definitions (Regulation D): time deposit and savings deposit
- 12 CFR 1030.4, Account disclosures (Regulation DD)
- Understanding Deposit Insurance
- Federal Reserve issues FOMC statement (target range 3-3/4 to 4 percent)