1. What is the CD Compound Interest Formula?

The compound interest formula calculates how much your CD investment will grow over time, taking into account the principal amount, interest rate, compounding frequency, and term length.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount including interest
• \( P \) — Principal investment amount
• \( r \) — Annual interest rate (decimal)
• \( n \) — Number of times interest is compounded per year
• \( t \) — Time the money is invested for (years)

Explanation: The formula shows how your money grows exponentially as interest is earned on both the principal and accumulated interest.

3. Bank of America CD Rates

Details: Bank of America offers various CD terms with competitive rates. As of 2023, their high-yield CDs offer rates up to 4.00% APY for 1-year terms (rates subject to change).

4. Using the Calculator

Tips: Enter your principal amount, select current CD rates, choose term length and compounding frequency. The calculator will show your potential earnings.

5. Frequently Asked Questions (FAQ)

Q1: What is the minimum deposit for Bank of America CDs?
A: Typically $1,000, but may vary by CD type and term length.

Q2: Are CD interest rates fixed?
A: Yes, Bank of America CD rates are fixed for the term length you select.

Q3: What happens when my CD matures?
A: You'll typically have a 10-day grace period to withdraw funds or reinvest in a new CD.

Q4: Are there penalties for early withdrawal?
A: Yes, early withdrawal penalties apply (typically 90-365 days of interest depending on term length).

Q5: How is CD interest taxed?
A: Interest is taxable as ordinary income in the year it's earned unless in a tax-advantaged account.