CD Compound Interest Calculator
Calculate CD compound interest with different compounding frequencies. Compare daily, monthly, quarterly, and annual compounding to maximize your CD returns.
CD Details
Recommended:
Daily Compounding
Earns $512.67 in interest
Interest Earned by Compounding Frequency
Difference: Daily compounding earns $12.67 more than annual compounding.
Growth Curves: All Compounding Frequencies
Detailed Comparison
| Compounding | Total Value | Interest | Effective APY |
|---|---|---|---|
| Daily | $10,512.67 | $512.67 | 5.13% |
| Monthly | $10,511.62 | $511.62 | 5.12% |
| Quarterly | $10,509.45 | $509.45 | 5.09% |
| Annually | $10,500.00 | $500.00 | 5.00% |
What is Compound Interest on a CD?
Compound interest means you earn interest on both your initial principal and previously earned interest. Most CDs use compound interest, which significantly increases your total returns over time compared to simple interest.
Our CD compound interest calculator shows you how different compounding frequencies affect your earnings, helping you maximize your CD returns.
Daily vs Monthly vs Quarterly Compounding
The frequency of compounding directly impacts your total earnings:
Daily Compounding
Interest calculated every day - highest returns. Best option for maximizing earnings.
Monthly Compounding
Interest calculated monthly - very good returns. Common and competitive option.
Quarterly Compounding
Interest calculated every 3 months - moderate returns. Less common option.
Annual Compounding
Interest calculated once per year - lowest returns. Rarely used for CDs.
How Compounding Frequency Affects Your Earnings
More frequent compounding increases your total earnings because interest is calculated and added more often:
Example: $10,000 at 5% APY for 1 year
- Daily compounding: $512.67 interest
- Monthly compounding: $511.62 interest
- Quarterly compounding: $509.45 interest
- Annual compounding: $500.00 interest
Daily compounding earns $12.67 more than annual!
Use our CD compound interest calculator to see the exact difference for your investment.
The Power of Daily Compounding
Daily compounding maximizes your CD returns because interest is calculated and added every single day. Over longer terms, this compounding effect becomes even more significant.
While the difference between daily and monthly compounding is usually small (often less than $10 on a $10,000 CD), daily compounding is always the best choice when available. Our calculator shows you exactly how much more you'll earn.
Choosing the Right Compounding Frequency
1. Always Choose Daily if Available
Daily compounding yields the highest returns. If a bank offers daily compounding, choose it.
2. Monthly is Also Excellent
Monthly compounding is very competitive and only slightly less than daily. It's a great option.
3. Avoid Annual Compounding
Annual compounding yields the lowest returns. Only choose it if the rate is significantly higher.
4. Use Our Calculator
Our CD compound interest calculator shows you the exact difference between frequencies for your specific investment.