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The rate is only good if you never need the money. Check the break-even.
A CD trades liquidity for rate, and the trade is only visible when you price the exit. This calculator grows your deposit at the APY to maturity, then runs the scenario banks hope you skip: breaking early — the balance at that month, the penalty in months of interest, and whether you would have done better simply staying in a high-yield savings account.
Savers use it before locking anything up: the maturity number is the easy half — the early-withdrawal scenario against a plain HYSA is what decides whether the CD's rate premium is real for their timeline. It is the check that turns "great rate" into an actual decision.
Balance = deposit × (1 + APY)^(years). APY already includes compounding, so no extra math: $10,000 at 4.5% APY grows to $10,450.00 in 12 months, $10,920.25 in 24, and $12,461.82 in 60. Interest is taxable as ordinary income in the year it is credited, even inside the CD term.
You pay a penalty in months of interest — typically 3 months on short CDs, 6–12 on longer ones. Example: $10,000 at 4.5%, 12-month term, 6-month penalty, broken at month 6: balance $10,222.52, penalty $227.48, net $9,995.05 — less than you deposited, and behind the $10,198.04 a 4% HYSA would have paid. The rate premium only survives if you do not touch the money.
A CD ladder: split the deposit across staggered terms (e.g., 6, 12, 18, 24 months) so something matures every few months, then roll each maturity into the longest rung. You capture most of the long-term rate with a near-term maturity always approaching — the penalty scenario rarely triggers.