1. What is CD Accrued Interest?

Accrued interest on a Certificate of Deposit (CD) is the interest that has been earned but not yet paid out. It accumulates daily based on the principal amount, interest rate, and the number of days the money has been invested.

2. How Does the Calculator Work?

The calculator uses the simple interest formula:

Where:

• Principal — Initial investment amount ($)
• Rate — Annual interest rate (decimal)
• Days — Number of days the money is invested

Explanation: The formula calculates the proportional interest earned for the specific period based on a 365-day year.

3. Importance of Accrued Interest Calculation

Details: Understanding accrued interest helps investors track earnings between payment periods, compare CD products, and plan for tax liabilities on interest income.

4. Using the Calculator

Tips: Enter the principal amount in dollars, annual interest rate as a decimal (e.g., 0.05 for 5%), and the investment term in days. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is this different from compound interest?
A: This calculator uses simple interest. Most CDs compound interest but pay it at maturity. For compounding CDs, the calculation would be more complex.

Q2: What if my CD compounds interest?
A: This calculator gives a simple interest estimate. Actual compounding CDs would earn slightly more due to interest earning interest.

Q3: Does this account for leap years?
A: No, it uses a standard 365-day year. The difference is negligible for most calculations.

Q4: Can I use this for partial CD withdrawals?
A: Yes, it can help estimate interest earned up to the withdrawal date, though penalties may apply.

Q5: How often do CDs typically pay interest?
A: Payment frequency varies - monthly, quarterly, semi-annually, or at maturity. Check your CD terms.