1. What is the CD Ending Balance Calculation?

The CD (Certificate of Deposit) ending balance calculation determines the total amount you'll have at the end of the CD term, including your principal and the interest earned. This uses simple interest calculation.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• \( Principal \) — Initial amount invested
• \( Rate \) — Annual interest rate (as percentage)
• \( Time \) — Time period in years

Explanation: The formula calculates the simple interest earned over the term and adds it to the original principal amount.

3. Importance of CD Calculations

Details: Understanding your ending balance helps in financial planning, comparing different CD offers, and making informed investment decisions.

4. Using the Calculator

Tips: Enter the principal amount in dollars, interest rate as a percentage (e.g., 2.5 for 2.5%), and time in years. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Does this calculator account for compound interest?
A: No, this calculator uses simple interest. Most CDs use simple interest unless specified otherwise.

Q2: What if my CD compounds interest?
A: For compound interest CDs, a different formula would be needed that accounts for compounding frequency.

Q3: Are CD interest rates fixed?
A: Typically yes, most CDs offer fixed rates for the term, though some may have variable rates.

Q4: Is the interest taxable?
A: Yes, CD interest is generally taxable as income in the year it's earned, unless it's in a tax-advantaged account.

Q5: What happens if I withdraw early?
A: Most CDs charge an early withdrawal penalty, which would reduce your ending balance.