A CDT (term deposit certificate) is a deposit you make with a financial institution for a fixed term at an agreed rate. At maturity you receive your principal plus interest, minus withholding tax.
How it works
- You choose the amount, the term in days, and the effective annual rate the institution offers.
- Your money is locked up until maturity.
- At maturity, the institution pays you the principal and the interest, or you can renew it.
How the yield is calculated
Gross interest is the principal times the effective annual rate, proportional to the number of days. Withholding tax is deducted from that interest: a percentage that the institution withholds and pays to the State.
Example with numbers
| Description | Value |
|---|---|
| Principal | $10,000,000 |
| Term | 180 days |
| Rate | 10 % E.A. |
| Gross interest | $481,244 |
| Withholding tax (4 %) | $19,250 |
| Net return | $461,994 |
| Total at maturity | $10,461,994 |
| Net E.A. rate | 9.59 % |
The withholding tax in the example is 4%; the rate depends on the tax rules in force and on your situation. Confirm it with your institution.
How to compare it
Always compare effective annual rates and the net rate after withholding. Also look at liquidity (whether you can withdraw early), the penalty for canceling, and whether the institution is supervised and has deposit insurance.
Last updated: October 9, 2026. Written by the BankIA (jsadsAI) team. Educational content: it does not constitute financial or legal advice.
Frequently asked questions
What happens if I withdraw before maturity?
It depends on the institution: some do not allow it and others charge a penalty. Check the terms before opening the CDT.
Why is my return lower than the advertised rate?
Because of withholding tax, which is deducted from the interest. In the example, the net rate is 9.59% versus the advertised 10%.
Is a CDT’s return guaranteed?
The rate is fixed when you open it, but there is always the institution’s risk. Check that it is supervised and what deposit insurance it has.
Keep exploring
CDT calculator
Calculate what a fixed-term CDT earns: gross interest, withholding tax, net return and net effective annual rate.
Open →Effective and nominal rates
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