CD Interest Rate Calculators
Certificate of Deposit rate calculators (CDC) are useful in calculating the amount of interest an investor will earn on a CD. It is an automated instrument, where in the investor has to fill up minimal details such as information about the initial deposit amount, maturity period of the CD, interest rate offered etc, so as to calculate the tentative amount of interest that can be earned over the CD.
CDC also offers comparisons relating to the detailed schedule of the Annual Percentage Yield (APY) and the ending balance of the CD upon maturity. Average Percentage Yields (APY) is the annual interest rate that is earned over an investment, irrespective of the frequency of compounding the interest amount in regards to the opening balance of the investment. At times, the investor’s gets the option of reinvesting the interest amount to the opening balance of the CD which results in them getting a higher compound rate of interest.
The annual rate of interest can be measured through an APY. The APY also comes handy for comparing the interest rates of different CDs and their compounding frequencies. Compounding is the process wherein one can of reinvest the interest amount the total interest can be calculated on the CD’s accumulated interest.
A CDC also gives investor’s an option to choose from the particular frequency wherein the CD’s interest is added to their account balance. A higher frequency means that the investor can get additional compounded interest on the accumulated interest sooner.
CD Rate Calculators
In order to maximize the earnings on CDs while maintaining ready cash for disposal simultaneously, a CD laddering calculator is useful. The following illustration would explain the working of a CD laddering Calculator. Suppose Bob has $100,000 in cash reserves and let’s say he invests in a $20,000 one-year CD, a $20,000 two-year CD and so on until his last investment is in the 5-year CD of $20,000 so that there is a rung on the ladder, then every time after the one-year CD matures he reinvests that money in a five-year CD. And by that time, his five-year CD has four years left until it matures. As each year’s CD gets matured, he will roll it into a five-year CD. Thus by implementing CD laddering, his total interest income will be much higher. CD laddering calculators are very useful for the determination of these maximum yields if the investor enters a few details about his investment amount.
A CD rate calculator is not only a great way to keep track of interest earned from CDs but is also more than helpful with keeping tracks of complex investments made over time.