1. What is Marcus CD?

Marcus by Goldman Sachs offers high-yield Certificates of Deposit (CDs) with competitive annual percentage yields (APY). Their CDs feature daily compounding interest and fixed rates for terms ranging from 6 months to 6 years.

2. How Does the Calculator Work?

The calculator uses the daily compounding formula:

Where:

• \( A \) — Final amount ($)
• \( P \) — Principal investment ($)
• \( r \) — Annual interest rate (decimal, e.g., 0.039 for 3.9%)
• \( t \) — Time in years

Explanation: The formula calculates how your investment grows with daily compounding interest, which means interest is calculated and added to your principal every day.

3. Understanding Daily Compounding

Details: Daily compounding means interest is calculated on your principal plus any previously earned interest every day. This results in slightly higher returns compared to simple interest or less frequent compounding.

4. Using the Calculator

Tips: Enter your principal amount in dollars, the annual interest rate as a decimal (e.g., 0.039 for 3.9%), and the time period in years (e.g., 1.67 for 20 months). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the current Marcus CD rate?
A: Rates vary by term and change frequently. As of 2023, their 20-month CD offers 3.90% APY. Check their website for current rates.

Q2: How does daily compounding differ from monthly?
A: Daily compounding calculates interest every day, while monthly does it once per month. Daily compounding yields slightly higher returns.

Q3: Are there penalties for early withdrawal?
A: Yes, Marcus CDs have early withdrawal penalties ranging from 90-365 days of interest depending on the term.

Q4: Is the interest taxable?
A: Yes, CD interest is taxable as ordinary income in the year it's earned, unless in a tax-advantaged account.

Q5: How does this compare to Marcus savings account?
A: CDs typically offer higher rates than savings accounts but require locking up your money for a set term.