Fix It or Float It: CD vs. Savings Rate Calculator

Enter an amount, a horizon, a fixed CD APY, and the APY your savings or money market account pays right now — the calculator runs the floating side down three rate paths against the locked CD.

A CD and a savings account both quote an APY, but only one is a promise: the CD rate is fixed by contract for the term, while the variable rate is whatever the bank pays today. This calculator holds the CD rate still and walks the variable rate down three assumed paths — flat, falling, rising — and reports which side ends with more interest under each.

Filling in the six boxes

Amount is the deposit you would move, applied to both sides. Horizon (months) is compounded across its whole span on the CD side, so the model assumes the certificate is held to maturity — enter the term printed on it.

CD APY, fixed comes from the account disclosure the institution must give you before the account is opened; Regulation DD (12 CFR Part 1030) requires it to state the annual percentage yield using that term.

Current savings or MMA APY is the yield in effect on the variable account now, from the statement or the published rate table. Reg DD also requires a variable-rate disclosure to say the rate may change and how often — the sentence this page exists to price.

Rate move per quarter is in percentage points and is your assumption, not a forecast: at 0.25 the paths step a quarter point each quarter, and at zero they collapse into one. Months already elapsed stays at zero for a fresh decision, and only drives a separate paragraph at the bottom.

Why every rate box asks for APY

APY already contains the compounding frequency, so a daily compounder and a quarterly compounder are comparable once both are stated as APY. A nominal rate is not. And since APY is defined over a full year, any other span follows from a fractional exponent — eighteen months is 18/12.

How the three paths are built

The CD side is one line of arithmetic: amount × (1 + CD APY) raised to months ÷ 12, minus the amount. A contractual rate has nothing to branch on.

The floating side is cut into three-month blocks. The first uses the APY you entered; each later block adds the quarterly move — subtracted when rates fall, added when they rise, nothing on the flat path — and grows the balance by (1 + that quarter's APY) raised to 3/12. A horizon that is not a multiple of three ends in a stub: 14 months runs four quarters, then a two-month block at 2/12.

Two details shape the labels. Rates are floored at zero, so a long falling path flattens at 0% rather than turning negative. And the rate named in a label is the one reached in the final quarter, not the path's average.

Reading the output, with assumed figures

The verdict lists which paths the CD wins, ties, and loses, with a half-cent tolerance so rounding is not reported as a difference. Below it sit a break-even sentence and four rows of interest and ending balance.

For example, suppose $25,000 over an 18-month horizon, a CD at 4.00% APY, a savings account paying 4.20% APY today, and an assumed move of 0.25 percentage points a quarter.

• CD: $1,514.90 of interest, ending at $26,514.90.
• Rates hold at 4.20%: $1,591.42, ending at $26,591.42 — floating ahead by $76.52.
• Rates fall to 2.95% by the last quarter: $1,352.20, ending at $26,352.20 — the CD ahead by $162.70.
• Rates rise to 5.45% by the last quarter: $1,830.69, ending at $26,830.69 — floating ahead by $315.79.

Under those assumptions the CD pays off only if rates fall: roughly $163 at stake on one side against $76 to $316 on the other. That gap is the price of certainty.

The break-even line in that run reads 4.00% — the CD APY itself, deliberately. Both sides use the same exponent, so they tie exactly when the floating account's average annualized yield equals the fixed rate. On the falling path the account starts above 4.00% and still loses, because the later quarters pull that average down.

Suppose instead that 6 months have already elapsed at 4.20%. The extra paragraph reports $519.60 earned so far, and says the remaining 12 months must average 3.90% APY to match the CD — a bar below the CD rate, because the elapsed months already earned more.

Where the model stops

The three paths are not predictions; nothing requires rates to move by the same amount every quarter. The floating side also compounds quarterly while most deposit accounts compound daily, so totals can sit a few dollars from a statement.

The asymmetry is what no calculator fixes. A bank can reprice a variable account on any business day, including mid-quarter; the CD rate cannot move until maturity. Even when floating wins on paper, the two results are not equally reliable.

Early withdrawal penalties are not calculated — if the money might be needed early, see the CD early withdrawal calculator and what happens when you cash out a CD early. Taxes, promotional rates that expire, balance tiers, and monthly fees are all absent, and deposit insurance is not checked here.

Liquidity is not scored either. A savings balance stays reachable while a CD is not, short of a penalty; the six-per-month transfer cap that 12 CFR 204.2 once imposed on savings deposits was removed in 2020. Where that matters, it outranks the table — see how to choose between a high-yield savings account and a CD.

Three follow-ups

Does the horizon have to equal the CD term?

For the result to mean anything, yes. The CD figure compounds the fixed APY across the full horizon, which only holds if the certificate matures at that point. A longer horizon needs a reinvestment rate the tool does not model; a shorter one is an early withdrawal, with a penalty to subtract separately.

Why does break-even come back as the CD rate?

Because a required average yield and the fixed rate are the same quantity once both sides compound over the same number of months. Read it as a threshold for the whole period, not for today — matching the CD means averaging that rate through every quarter, including the ones after a cut.

What number belongs in the quarterly move box?

Run it more than once. Start at zero for the gap with no movement, then raise the step until the verdict flips. If a small step flips it, the decision is finely balanced and the certainty of a fixed rate carries more weight. If the verdict survives a large move, the exact number in that box stops mattering.