1. What is This Calculator?

This calculator computes the interest earned on a Bank of America Certificate of Deposit (CD) over 18 months. While 0 APR means no interest, most CDs do earn interest, and this tool uses APY (Annual Percentage Yield) for accurate yield calculations.

2. How Does the Calculator Work?

The calculator uses the following formula:

Where:

• \( Principal \) — Initial deposit amount in dollars
• \( APY \) — Annual Percentage Yield (converted to decimal for calculation)
• \( 12 \) — Months in a year
• \( 18 \) — Fixed term of 18 months

Explanation: The formula calculates monthly interest by dividing APY by 12, then multiplies by the 18-month term to get total interest earned.

3. Understanding CD Interest

Details: CDs typically offer fixed interest rates for specific terms. APY reflects the real rate of return, accounting for compound interest. Even small APY differences can significantly impact earnings over time.

4. Using the Calculator

Tips: Enter your principal deposit amount, the CD's APY percentage, and note the fixed 18-month term. All values must be positive numbers (APY can be 0).

5. Frequently Asked Questions (FAQ)

Q1: What if my CD has a different term?
A: This calculator is specifically for 18-month CDs. For other terms, adjust the months value in the formula.

Q2: How often is CD interest compounded?
A: Most Bank of America CDs compound daily, which is already accounted for in the APY calculation.

Q3: Are there penalties for early withdrawal?
A: Yes, CDs typically charge penalties for early withdrawal, which would reduce your earned interest.

Q4: Is the interest taxable?
A: Yes, CD interest is generally taxable as ordinary income in the year it's earned.

Q5: Why use APY instead of APR?
A: APY includes compounding effects, giving a more accurate picture of your actual earnings.