1. What is the Marcus CD Calculator?

The Marcus CD Calculator helps you estimate the growth of your Certificate of Deposit (CD) investment with Marcus by Goldman Sachs, using daily compounding interest. It's particularly useful for their high-yield CD products like the 20-month CD with 3.90% APY.

2. How Does the Calculator Work?

The calculator uses the daily compounding formula:

Where:

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

Explanation: The formula calculates daily compounding by dividing the annual rate by 365 days and compounding over the total number of days (365 × years).

3. Importance of CD Calculations

Details: Accurate CD growth projections help investors compare different CD terms and rates, plan for financial goals, and understand the power of compound interest.

4. Using the Calculator

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

5. Frequently Asked Questions (FAQ)

Q1: How does Marcus CD compare to regular savings?
A: CDs typically offer higher rates than savings accounts but require locking funds for a fixed term.

Q2: What is the penalty for early withdrawal?
A: Marcus CDs have early withdrawal penalties (e.g., several months' interest) which this calculator doesn't account for.

Q3: Are CD interest rates fixed?
A: Yes, Marcus CDs offer fixed rates for the entire term, unlike variable-rate savings accounts.

Q4: How often is interest compounded?
A: Marcus compounds interest daily, which gives slightly better returns than monthly compounding.

Q5: Are CD earnings taxable?
A: Yes, interest earned is taxable as income in the year it's credited, unless in a tax-advantaged account.