Inflation-Adjusted Return Calculator
A 4.5% CD under 3% inflation is really earning about 1.5%. See the purchasing power you genuinely gain — or lose.
Why you divide rather than subtract
The shorthand “4.4% yield minus 2.8% inflation = 1.6% real” lands close but flatters systematically. The correct Fisher calculation divides: (1.044 ÷ 1.028) − 1 = 1.56%. A small difference at today’s numbers; at 1970s inflation it was the difference between thinking you had broken even and knowing you were losing. This tool also removes tax first, which the shorthand always forgets — and tax pushes more CDs into negative-real territory than inflation does.
A 4.40% CD, a 24% bracket and 2.8% inflation: after-tax yield 3.34%, real return 0.53%. Positive, yet a fifth of the headline. That is the honest size of the win.
What to do with a negative number
A negative real return does not automatically mean “skip the CD” — cash under a mattress runs at inflation-minus-everything. It means comparing the alternatives on the same after-tax, after-inflation basis: I bonds (which track CPI by construction), Treasuries (free of state tax), or shorter terms that let you re-price sooner. Losing 0.5% a year knowingly beats losing 2.8% by default.