Methodology

This page documents every calculation SaverGrid performs, so you can verify any number the site shows you.

Definitions

• APY (Annual Percentage Yield) is the annualized yield that includes compounding. UnderRegulation DD, if a deposit-account advertisement states a rate of return, it must state it as APY.
• Nominal rate is the stated annual rate before compounding, sometimes called the "interest rate" on bank disclosures.
• Term is the CD's length. SaverGrid's model treats each month as 1/12 of a year.

CD value at maturity

Because APY already includes compounding, maturity value depends only on APY and time:

V = P × (1 + APY)^(m / 12)

where P is the deposit, APY is the advertised yield as a decimal, and m is the term in months. Total interest is V − P.

Worked example: $10,000 at 4.50% APY for 12 months:10,000 × (1.045)^1 = $10,450.00. Under SaverGrid's assumption that 12 months equals one year, this produces an estimated $450 of interest before tax. A bank's result may vary slightly based on dates, rounding, and account terms. Applying a nominal-rate compounding formula directly to an APY would double-count compounding and overstate the estimated earnings.

APY ↔ nominal rate conversion

Shown under "Advanced options". With n compounding periods per year:

APY = (1 + r/n)^n − 1

r = n × ((1 + APY)^(1/n) − 1)

Example: a 4.50% nominal rate compounded monthly is (1 + 0.045/12)^12 − 1 = 4.594% APY.

Illustrative monthly-equivalent growth schedule

The growth chart and CSV schedule apply the monthly-equivalent growth factor (1 + APY)^(1/12). This evenly models the advertised APY across monthly intervals and may not match a bank's actual daily accrual or interest-crediting schedule. Each month's balance is computed from the closed-form formula; this avoids repeated rounding at each monthly step.

CD ladder

The ladder calculator divides the total deposit T equally among the selected rungs, distributing any leftover cents across the earliest-maturing rungs. For rungi:

Vᵢ = Pᵢ × (1 + APYᵢ)^(mᵢ / 12)

First-cycle interest is Σ(Vᵢ − Pᵢ). The combined maturity-values figure isΣVᵢ, but each value occurs on its rung's own maturity date. It is not a balance at one point in time.

The combined schedule models each active rung through the current month and holds its proceeds flat after maturity:

combined value at month t = Σ[Pᵢ × (1 + APYᵢ)^(min(t, mᵢ) / 12)]

No reinvestment is assumed because future CD availability and renewal APYs are unknown. Minimum deposits, grace periods, renewal policies, penalties, fees, and taxes are not modeled.

CD early-withdrawal penalty

The early-withdrawal calculator models a full withdrawal after month w. The balance before the penalty is:

B = P × (1 + APY)^(w / 12)

For a penalty stated as p months of interest:

Q = P × ((1 + APY)^(p / 12) − 1)

For d days of interest:

Q = P × ((1 + APY)^(d / 365) − 1)

For k weeks of interest:

Q = P × ((1 + APY)^((7 × k) / 365) − 1)

A fixed-dollar penalty is used directly. Estimated proceeds are B − Q. If the user confirms that the account disclosure caps the penalty at earned interest, the applied penalty is the smaller of Q and B − P. Otherwise it is limited only to the modeled account balance so proceeds cannot be negative.

The break-even month is the first modeled month when accumulated interest covers the full stated penalty. The comparison with holding to maturity is the estimated maturity value minus withdrawal proceeds; it does not model returns earned after the money is withdrawn.

For period-based penalties, SaverGrid uses equivalent APY growth. A bank may instead use its nominal interest rate, actual calendar days, or another method in the account agreement. Regulation DD permits early-withdrawal penalties to be disclosed in periods of interest or as a dollar amount, and requires the calculation method and assessment conditions to be disclosed. The bank's account agreement and payoff quote control.

Assumptions

• Interest stays in the CD until maturity (no interest disbursement to another account).
• A month is 1/12 of a year; we do not model day-count conventions.Regulation DD's APY formula uses the actual number of days in the term on a 365-day basis, so the interest a bank credits can differ slightly from this model depending on start date, term dates and rounding.
• Results are pre-tax estimates. CD interest is generally taxable for federal income-tax purposes. The timing of when you report it depends on the CD's term and how the bank reports the interest. CDs with maturities longer than one year may involve annual original-issue-discount reporting. State tax treatment varies.
• The standard CD and ladder calculators do not deduct early-withdrawal penalties. The dedicated penalty calculator uses the separate assumptions documented above.
• Fees are not modeled.
• Stepped and variable rates are not modeled. The calculator assumes a fixed APY for the full term.

Rounding

Calculations use unrounded internal values. Rounding to the cent (half away from zero) happens once, at display and export time, never inside the calculation. Chart and schedule values derive from the same unrounded series.

Sources

• CFPB, Regulation DD (Truth in Savings): APY definition and required disclosures.
• CFPB, Regulation DD § 1030.4: time-account disclosures, including early-withdrawal penalties, interest withdrawals, and renewal policies.
• CFPB, Regulation DD Appendix B: model clauses for penalties stated as periods of interest or fixed dollar amounts.
• FDIC, National Rates and Rate Caps: context for typical deposit rates.
• IRS, Topic 403 (Interest Received): general treatment of taxable interest.
• IRS, Publication 550 (Investment Income and Expenses): CD interest and original-issue-discount reporting.

Testing

The math library behind this site ships with an automated test suite that locks in known values under SaverGrid's stated model (for example, a $10,450.00 estimated maturity value for $10,000 at 4.50% APY over 12 months) and property checks (conversion round-trips, schedule consistency), cent-accurate ladder allocations, combined ladder schedules, and month-, week-, day-, and dollar-based early-withdrawal penalties. The suite must pass before any change to the site is published.