Bankrate Savings Account Calculator
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Reviewed by Calculator Editorial Team
Use our Bankrate Savings Account Calculator to estimate how much interest you'll earn on your savings account over time. This tool helps you compare different interest rates, compounding periods, and deposit amounts to make informed financial decisions.
How to Use This Calculator
To use the Bankrate Savings Account Calculator:
- Enter the principal amount (initial deposit) in the first field.
- Select the annual interest rate (APR) from the dropdown menu.
- Choose the compounding frequency (daily, monthly, quarterly, annually).
- Enter the number of years you plan to keep the money in the account.
- Click "Calculate" to see your estimated earnings.
The calculator will display the total amount in your account after the specified period, the total interest earned, and a growth chart showing your savings over time.
Formula Used
The Bankrate Savings Account Calculator uses the compound interest formula:
A = P × (1 + r/n)nt
Where:
- A = the future value of the investment/loan, including interest
- P = the principal investment amount (the initial deposit or loan amount)
- r = the annual interest rate (decimal)
- n = the number of times that interest is compounded per year
- t = the time the money is invested or borrowed for, in years
For the interest earned, we use:
Interest = A - P
Worked Example
Let's say you deposit $1,000 in a savings account with a 2% annual interest rate, compounded monthly, for 5 years.
- Principal (P) = $1,000
- Annual interest rate (r) = 2% or 0.02
- Compounding frequency (n) = 12 (monthly)
- Time (t) = 5 years
Using the formula:
A = 1000 × (1 + 0.02/12)12×5
A ≈ $1,104.08
Total interest earned = $1,104.08 - $1,000 = $104.08
Savings Account Comparison
Compare different savings account options using the calculator. Here's an example comparison table:
| Account Type | APR | Compounding | 5-Year Growth | Interest Earned |
|---|---|---|---|---|
| High-Yield Savings | 4.5% | Daily | $1,222.55 | $222.55 |
| Online Savings | 3.0% | Monthly | $1,159.27 | $159.27 |
| Traditional Savings | 0.5% | Annually | $1,051.27 | $51.27 |
This table shows how different interest rates and compounding frequencies affect your savings growth over 5 years with a $1,000 initial deposit.
Frequently Asked Questions
What is the difference between APR and APY?
APR (Annual Percentage Rate) is the simple annual interest rate, while APY (Annual Percentage Yield) is the effective annual rate that takes into account compound interest. APY is generally higher than APR because it reflects the effect of compounding.
How often should I compound my savings interest?
The more frequently interest is compounded, the higher your earnings will be. Most savings accounts compound interest daily, but some may offer monthly or quarterly compounding.
Is it better to have a higher APR or a higher APY?
For the same interest rate, APY will always be higher than APR because it accounts for compounding. Therefore, a higher APY is generally better as it reflects the actual return on your investment.