APY vs interest rate
APY already reflects compounding over a year, so this calculator compounds once per year using the entered APY. If your bank quotes a nominal rate with a separate compounding frequency, use a compound interest calculator instead.
Example
A $10,000 CD at 4% APY for 3 years grows to about $11,249 before any early-withdrawal penalty.
Common mistakes
Do not assume the advertised APY applies if you withdraw early. Check the bank's penalty rule and whether interest is credited monthly, annually or at maturity.
Penalty assumptions
Early-withdrawal penalties vary by institution and term. This calculator estimates a penalty as a number of months of average earned interest and caps it at interest earned. It does not model promotional rules, partial withdrawals or deposit insurance limits.
Last reviewed: 2026-05-17