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Learning how to save is one of the most important financial habits to develop. You can use Forbes Advisor’s free savings calculator to determine how your savings can grow. With interest that compounds—that is, you’re earning interest on your interest, not only on your principal—you will see accelerating growth the longer the money is held on deposit.
Using this savings account interest calculator, you can compare how your savings will grow, depending on whether or not you make ongoing deposits after your initial savings deposit.
Savings Calculator
Tips for how to use our savings calculator appear below—whether you’re making a single deposit or you’ll be making regular additions. We also answer some FAQs.
What Is a High-Yield Savings Account Calculator?
A high-yield savings account calculator is a tool you can use to estimate the future growth of any money you hold in an interest-bearing savings account. It allows you to test different variables to find the best return on your savings.
A savings calculator typically requires these variables:
- Your starting balance
- How much you’ll regularly deposit into the account
- How long you plan to keep your money in the account
- The interest rate
- How often interest is compounded
Tweaking these variables to test different scenarios can help you compare different account offerings to see which one maximizes your savings.
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Up to 4.5% APY*
(for customers who have a Cash Card)
Order a free, customizable debit card that comes with a variety of rewards
FDIC insurance & 24/7 fraud monitoring / prevention
Disclosure
Cash App is a financial platform, not a bank. Banking services provided by Cash App’s bank partner(s)
*To earn the highest interest rate on your Cash App Savings balance, you need to be 18 or older, have a Cash App Card, and direct deposit at least $300 monthly into Cash App. Cash App will pass through a portion of the interest paid on your savings balance held in an account for the benefit of Cash App customers at Wells Fargo Bank, N.A., Member FDIC
**Prepaid debit cards issued by Sutton Bank.
How To Use This High-Yield Savings Calculator
To get the most value from this compound savings calculator, gather the numbers you’ll need to input. You can start with as few as three values:
- Starting amount: the amount of money you will deposit at the start
- Years to save: how long you plan to save this money
- Rate of return: the annual percentage yield (APY) you’ll be paid
In our current inflationary environment, many of the best online savings accounts pay 5.00% APY or higher.
Making a Single Deposit
For this example, start with a $5,000 deposit that you plan to save for 10 years, earning 4.00% APY.
The calculator’s default value for how often interest compounds is annually. With a savings account, you may have a monthly or daily compounding frequency, which helps your money grow faster. You’ll need to check these details with your bank or credit union.
Do the math: If you deposit $5,000, and make no additional deposits over the 10-year period, earning 4.00% APY, you’d have $7,454.16 saved in 10 years. This includes your $5,000 deposit plus $2,454.16 earned interest.
Making Regular Additional Deposits
To show how your savings can grow when you add to them regularly, add the following three values:
- Additional contributions: how much you’ll regularly add to your savings
- Frequency: how often you’ll add it (from weekly to yearly)
- Interest: how often your interest compounds (from annually to daily)
With that same $5,000 initial deposit, 10-year savings period and 4.00% APY, now add in that you’ll faithfully contribute $100 per month.
Do the math: By contributing $100 per month, or $12,000 over the 10-year period, you’d have $22,179.14 saved in 10 years: $17,000 principal and $5,179.14 earned interest.
When Is Savings Account Interest Calculated?
Interest on a savings account is calculated daily, monthly, quarterly or annually, depending on the account. It’s common for savings accounts to calculate interest daily but compound it and credit it to your account on a monthly basis.
Accounts that compound interest daily or monthly will help your savings grow faster, while accounts that calculate interest less frequently will grow slower. Knowing this is important because compound interest exponentially increases the rate at which your money grows. As the balance in your account increases, the amount of interest your account earns will grow too.
Regularly withdrawing money from your savings account will lower your balance and how much interest you earn each month.
How Much Interest Does a Savings Account Earn?
The amount of interest a savings account earns depends on the account’s interest rate and balance, and interest rates vary greatly by bank. A traditional savings account with a 0.01% APY might only earn a few cents in interest per year, while a high-yield savings account earning a 4.00% APY could earn tens or hundreds of dollars in interest per year, depending on the balance you maintain. Usually, online banks have the highest rates on savings accounts.
The more you grow your savings and avoid taking withdrawals, the more interest your savings will earn you. Savings accounts that compound interest daily will also earn more over time than those that compound interest monthly or quarterly.
How To Calculate Interest on a Savings Account
To calculate interest on a savings account, you’ll multiply the principal (your deposit) by the account’s interest rate and the time period for saving. The formula looks like this:
P (principal) x R (interest rate) x T (time period) = Simple interest
For example, if you have a balance of $1,000 earning 4.00% APY for five years, you would multiply 1,000 by 0.04 by 5 to reach a simple interest total of $200.
Simple interest determines earnings on only money you’ve deposited. However, most savings accounts earn compound interest. This means interest earnings are deposited back into your account, increasing the total balance used to calculate future earnings. When interest earns interest, your money grows faster.
Calculating compound interest is more complicated, and you need to factor in how often interest is compounded, or calculated. Using the same values as above with monthly compounding and no additional deposits, you’d earn $221 in interest over five years. Use this savings interest calculator or our compound interest calculator to calculate interest on a savings account.
How To Calculate High-Yield Savings Interest
Calculating interest for a high-yield savings accounts follows the same rules but may use higher interest rates or different compounding periods. Many high-yield savings accounts compound interest on a daily or monthly basis. A more frequent compounding schedule gives your money more chances to grow, with daily compounding offering the highest earning potential.
How To Choose a High-Yield Savings Account
To choose a high-yield savings account, consider your goals and savings habits. Look for accounts with the highest interest rates, and preference those that don’t require you to maintain a certain balance or meet other activity requirements to earn that rate. You’ll also want to avoid monthly fees and look for low opening deposit requirements. Fortunately, many online banks offer no-minimum, no-fee savings accounts.
You should think about features that might make your life easier when adding or accessing funds. The ability to create separate accounts or buckets, schedule automatic transfers and make free ATM withdrawals may come in handy depending on how you plan to use the account.
Pro Tip
The key to growing your money is to save consistently. Automating your savings can help you do this. Determine how much money you want to save and have that amount automatically transferred into a high-yield savings account on a weekly or monthly basis. The more often you contribute, the faster your money will grow.
Other High-Yield Savings and Checking Products
High-yield savings accounts are just one option for growing and protecting your money. Other interest-bearing savings and checking products are better suited for different uses.
For regular spending, checking accounts are best. The best checking accounts offer no or low fees and some even earn interest. Unlike savings accounts, which may limit the number of free withdrawals you can make per month, checking accounts typically allow for unlimited withdrawals.
For convenient access to savings and higher balances, money market accounts (MMAs) are ideal. MMAs are savings accounts with some similarities to checking accounts. They may offer better rates than other savings accounts and can come with checks or debit cards for easy cash access. However, MMAs often have withdrawal restrictions and high deposit requirements.
Finally, for the best rates on long-term savings, certificates of deposit (CDs) typically come out on top. A CD is a type of savings account that requires you to lock up your money for a specified period of time. These tend to offer the best interest rates but limit your access to funds. If you need to make a withdrawal before your CD term is up, you’ll likely pay a high penalty fee.
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Frequently Asked Questions (FAQs)
What is the “magic” of compound interest?
With compound interest, you earn interest not only on your deposit, or principal, but also on the interest it earns. As your interest keeps earning interest, the longer you save, the steeper the growth curve becomes, which is often referred to as the magic of compound interest. The longer your savings are on deposit, the more powerful this compounding becomes.
Where should I keep my emergency savings?
In the event of an emergency, you need to access your savings as quickly as possible. For this reason, a time deposit, like a certificate of deposit or CD, may not be your best choice, as you might incur an early withdrawal penalty. You also want your emergency savings to be safe, so a federally insured savings or checking account is a better choice than, say, the stock market.
What are the best high-yield savings accounts?
To earn the highest APY, you may have to shop around a bit. As of October 2023, the national average savings APY is 0.46%, according to FDIC data. Online banks and credit unions tend to offer rates far above this. In choosing a savings account, you may also want to consider how easy the account is to access, whether in person, online or by phone.
What are some things smart savers do?
Good savers tend to have several behaviors and habits in common. A popular way to develop a solid savings habit is to pay yourself first. That way, you don’t run out of money before you get around to allocating money to savings. You also may want to automate your savings efforts to be sure they stay on track. Learn six things smart savers do.
With such low interest rates, does saving really matter?
Yes, it does. As you can see in the second example we provided above, APY helps your money grow, but over time, what really makes the difference is that you make saving money a habit. Research has shown that saving regularly contributes more directly to future financial success than the specific APY you earn. Savings rates are fairly high right now, but even in a low interest rate environment, it pays to continue saving.
How do you calculate monthly interest on a savings account?
To calculate interest on a savings account, use the following compound interest formula: A = P(1+R/N)^NT.
A represents the amount of money you’ll have in your bank account after interest is calculated. To solve for A, you’ll need to include the following variables:
- P: Your principal, the original starting balance in your account
- R: The interest rate or APY on the account (written as a decimal)
- N: the number of times the bank compounds interest in a year
- T: The duration of time you want to calculate for (0.083 = 1 month)
Is savings account interest simple or compound?
Savings accounts typically earn compound interest, which is usually compounded daily and added to the account monthly. Each time interest is calculated, it’s calculated on your original balance plus any accrued interest that has been added to your account.
