Most people that are interested in investing in Certificates of Deposit (CD) will find that using a CD rate calculator will help them calculate how much interest he or she will earn on his/her CD. The CD rate calculator is an instrument that can automatically calculate the interest based on inputs from the investor such as initial deposit amount, period of maturity of the CD as well as interest rate that is offered, and so on.
The CD rate calculator will also allow investors to compare the schedule of Annual Percentage Yield and the final balance of the CD when it matures. The Annual Percentage Yield is the amount of interest earned annually on the investment and it does not matter what the frequency of compounding of interest is with regard to the opening balance of the amount invested.
Through the medium of the Average Percentage Yield, investors can measure annual rate of interest and the Average Percentage Yield is also useful for making comparison of interest rates of various CDs as well as their compounding frequencies. The meaning of compounding is that an investor may want to reinvest the interest and then the total interest will be calculated on the combined interest of the CD.