5.75% High Yield CD Calculator

CD Interest Formula:

\[ Interest = P \times (1 + \frac{0.0575}{365})^{(365 \times t)} - P \]

Interest Earned:

Total Value at Maturity:

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1. What is a High Yield CD?

A High Yield Certificate of Deposit (CD) is a savings account with a fixed interest rate and maturity date, typically offering higher interest rates than regular savings accounts. The 5.75% APY represents an exceptionally competitive rate in the current market.

2. How Does Daily Compounding Work?

The calculator uses daily compounding formula:

\[ Interest = P \times (1 + \frac{r}{n})^{(n \times t)} - P \]

Where:

$ P $ — Principal amount ($)
$ r $ — Annual interest rate (5.75% or 0.0575)
$ n $ — Number of compounding periods per year (365 for daily)
$ t $ — Time in years

Explanation: Interest is calculated each day based on the current balance, including previously earned interest.

3. Understanding the 5.75% APY

Details: APY (Annual Percentage Yield) includes the effect of compounding. The stated 5.75% APY means your money grows by 5.75% over one year with all compounding included.

4. Using the Calculator

Tips: Enter your principal investment amount and the term length in years. The calculator will show both the interest earned and total maturity value.

5. Frequently Asked Questions (FAQ)

Q1: Is the 5.75% APY guaranteed?
A: Yes, CD rates are fixed for the term length, unlike variable-rate accounts.

Q2: Are there penalties for early withdrawal?
A: Typically yes - most CDs charge several months' interest for early withdrawals.

Q3: How is this different from monthly compounding?
A: Daily compounding earns slightly more as interest starts earning its own interest sooner.

Q4: Are CD earnings taxable?
A: Yes, interest is taxable as ordinary income in the year it's earned.

Q5: What's the minimum investment for 5.75% APY?
A: Minimums vary by institution but are typically $500-$2,500 for best rates.