1. What is a 9-Month CD?

A 9-month Certificate of Deposit (CD) is a savings product that offers a fixed interest rate for a 9-month term. Your money earns interest daily and compounds according to the bank's terms, typically resulting in higher yields than regular savings accounts.

2. How Does the Calculator Work?

The calculator uses the daily compounding formula:

Where:

• \( A \) — Final amount ($)
• \( P \) — Principal amount ($)
• \( r \) — Annual interest rate (decimal)
• 365 — Days in year
• 0.75 — 9 months expressed in years (9/12)

Explanation: The formula calculates daily compounding interest over 9 months (273.75 days).

3. Importance of CD Calculations

Details: Accurate CD calculations help investors compare different CD offerings and understand exactly how much their investment will grow during the term.

4. Using the Calculator

Tips: Enter the principal amount in dollars, the annual interest rate (APY) as a percentage. For example, for Marcus' 4.20% APY CD, enter 4.20 in the rate field.

5. Frequently Asked Questions (FAQ)

Q1: Is the interest compounded daily?
A: This calculator assumes daily compounding, which is common for most CDs. Check with your bank for their specific compounding schedule.

Q2: What's the difference between APR and APY?
A: APR doesn't account for compounding, while APY does. Always use APY for CD calculations as it reflects the actual yield.

Q3: Are CD rates guaranteed?
A: Yes, the rate is fixed for the CD term. However, early withdrawal may result in penalties.

Q4: How does this compare to a savings account?
A: CDs typically offer higher rates than savings accounts but require you to lock in your money for the term.

Q5: Are CD earnings taxable?
A: Yes, interest earned on CDs is taxable as income in the year it's credited to your account.