A certificate of deposit (CD) calculator helps determine the potential return on investment. By inputting the deposit amount, interest rate, and term length, users can project the final value of their CD, including accrued interest. For example, a $10,000 deposit with a 4% annual percentage yield (APY) for a 12-month term would yield approximately $400 in interest.
Understanding potential returns is crucial for effective financial planning. This knowledge empowers savers to compare different CD offers and make informed decisions based on their individual financial goals. Historically, CDs have been a popular choice for risk-averse investors seeking predictable returns. This predictability allows individuals to incorporate expected CD earnings into long-term financial strategies.
