Understanding CD Maturity Value
Real-world scenario: Deposit $25,000 at 4.5% for 3 years, compounded monthly.
What is CD Maturity Value?
A fixed-term deposit maturity estimator. Early withdrawal penalties, promotional teaser rates, and bank day-count conventions are not modeled.
- APY-style rate you enter as annual %
- n = compounds per year
- No penalty modeling
The Formula
Compound Interest Maturity
A = P × (1 + r/n)^(n×t)
Worked Example
Scenario: Deposit $25,000 at 4.5% for 3 years, compounded monthly.
Step 1: r = 0.045; n = 12; t = 3
Step 2: A = 25000 × (1 + 0.045/12)^(36) ≈ $28,585
Answer: Maturity value is about $28,585.
Common Use Cases
- Quote compare: bank A vs bank B
- Term tradeoffs: 12 vs 36 months
- Ladder planning: rung maturity sizes
Pro Tips
- Confirm APY vs interest rate on the disclosure
- Penalties can erase early gains
- FDIC limits apply per ownership category
Limitations: CD Maturity Value results are educational savings aids—not tax, investment, or financial advice. Confirm IRS HSA limits, 529 rules, and CD terms with plan documents and a qualified professional.
FAQ
Is APY the same as the rate I enter?
Enter the annual percentage yield (or nominal rate) from your quote. If the bank quotes APY already compounded, using the same n may slightly double-count—prefer the rate convention on the disclosure.
What if rate is 0%?
Maturity value equals principal.
Authoritative References
For savings education, consult:
- IRS Pub 969 — HSAs and other health plans
- Investor.gov — investor education
- FDIC — deposit insurance basics