How are CD Interests computed when bought on the market?
How are CD Interests computed when bought on the market?
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Alexis Wilke · External communityPost link
External question — Personal Finance Stack Exchange
Author: Alexis Wilke
Original post: https://money.stackexchange.com/questions/168050
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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I bought a CD that matured and got the principal back and one interest payment.
Here are the transactions:
Date Description Quantity Price Amount
08.26.2025 Purchase 2,000 $100 -$20,000.00
12.08.2025 Interests $209.42
12.08.2025 Matured -2,000 $100 $20,000.00
The interest was set at 4.2% and it was a 3 months CD. I bought it early to get it at the $100/share (although I know at times you can get it at a smaller price, but you need to be lucky and may have to pay interests for a few days... not worth my while).
So, I thought the interests would be:
$20,000.00 x 4.2% / 4 = $210.00
But as we can see above, it was
only
$209.42.
I'm just wondering where did the $0.58 cents difference go? From my statement, there were no fees whatsoever.
I don't think that's relevant, but I have a trading account with Charles Schwab in the US.
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0xFEE1DEAD · External communityPost link
External answer — Personal Finance Stack Exchange
Author: 0xFEE1DEAD
Original post: https://money.stackexchange.com/a/168051
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
The interest is based on the settlement date/effective date, which was likely 9/8/2025.
There's no "buying it early" to get a better yield, it's simply issued at par.
$20,000 * 4.2% * 91/365 = $209.42
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