1. What is the Marcus CD Interest Formula?

The Marcus CD Interest formula calculates the total interest earned on a Certificate of Deposit (CD) with daily compounding. Marcus by Goldman Sachs offers competitive CD rates, including a 3.90% APY for their 20-month CD.

2. How Does the Calculator Work?

The calculator uses the daily compounding interest formula:

Where:

• \( P \) — Principal amount (initial investment)
• \( r \) — Annual interest rate in decimal form (e.g., 3.90% = 0.039)
• \( t \) — Time in years (e.g., 20 months = 20/12 ≈ 1.6667 years)
• 365 — Number of compounding periods per year (daily)

Explanation: The formula accounts for daily compounding, which means interest is calculated and added to the principal each day, leading to slightly higher returns than simple annual compounding.

3. Understanding CD Interest

Details: CDs offer fixed interest rates for a set term. Marcus CDs compound interest daily and credit it to your account at maturity. Early withdrawal may incur penalties.

4. Using the Calculator

Tips: Enter principal in dollars, annual rate as a decimal (e.g., 3.90% = 0.039), and time in years. For partial years, use decimals (e.g., 18 months = 1.5 years).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APY and APR?
A: APY (Annual Percentage Yield) includes compounding effects, while APR (Annual Percentage Rate) doesn't. Marcus CDs use APY to show the actual yield.

Q2: How often is interest compounded in Marcus CDs?
A: Marcus compounds interest daily, though it's typically paid at maturity unless you choose a different option.

Q3: Are CD interest rates fixed?
A: Yes, Marcus CD rates are fixed for the entire term when you open the account.

Q4: What happens when my CD matures?
A: Marcus will notify you before maturity. You can withdraw funds, renew the CD, or transfer to another Marcus account.

Q5: 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.