Banks and other financial institutions offer certificates of deposit (CDs), at a predetermined rate of interest for a preset term. Banks benefit from CDs because they have a guarantee they will have the money to use for the term while customers also benefit because they typically lock in a higher rate of interest than a savings account. CDs vary in how often they compound interest. The more often interest compounds, the higher the effective rate of interest. For example, a CD that compounds interest quarterly will have a higher effective interest rate than one that compounds interest annually.

1. Divide the annual interest rate by four to calculate the quarterly interest rate on your CD. For example, if the annual rate equals 4.8 percent, divide 0.048 by 4 to get 0.012 as the quarterly rate.

2. Add 1 to the quarterly interest rate on your CD. In this example, add 1 to 0.012 to get 1.012.

3. Raise the result to the number of quarters interest has accrued on the CD. For example, if you want to figure the accrued interest after 7 quarters, raise 1.012 to the seventh power to get 1.087085211.

4. Multiply the result by the initial CD balance to find the balance after the specified number of quarters. In this example, if you started with $8,850, multiply $8,850 by 1.087085211 to find your CD is worth $9,620.70 after seven quarters.

5. Subtract the initial amount from the current balance to find the accrued interest. Completing this example, subtract $8,850 from $9,620.70 to find you have $770.70 in accrued interest.

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