How much a CDT really pays

A CDT (a Colombian certificate of deposit) at 12% E.A. sounds great. But between the rate the bank advertises and what you really gain in purchasing power there are two deductions: taxes and inflation. Let’s do the full calculation.

Step 1: the rate you are offered (nominal return)

This is the CDT’s effective annual rate (E.A.). With COP 10,000,000 at 12% E.A. for one year, you earn COP 1,200,000 in interest.

Step 2: after withholding tax (net return)

The bank withholds 4% of the interest: COP 48,000. You keep COP 1,152,000, a net return of 11.52%.

Step 3: after inflation (real return)

If prices rise 6.24% that year (annual inflation as of August 2026), your COP 11,152,000 buys the same as COP 10,497,000 today. Your gain in purchasing power is 4.97%, less than half of what the rate advertised.

When a CDT loses to inflation

It happened in 2022: annual inflation in Colombia reached double digits, and many CDTs opened before the rate hikes ended up with a negative real return. They earned pesos but lost purchasing power. That is why looking at the rate is not enough: you have to compare it with the inflation you expect over the CDT’s term.

Three ideas to make it pay more

• Compare in E.A. If you are quoted a nominal rate, convert it with the rate converter.
• Look at the term and at where you expect rates to go. If you think Banco de la República (Colombia’s central bank) will cut its rate, locking in a high rate for longer may pay off; if you think it will raise it, short terms let you reinvest sooner.
• Know the indexed alternative. Some CDTs and bonds pay “CPI + a margin”: they protect you against inflation, in exchange for not knowing in advance how many pesos you will receive.