Calculate Earnings on High Yield Savings Account
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Reviewed by Calculator Editorial Team
High yield savings accounts (HYSA) offer competitive interest rates compared to traditional savings accounts. This calculator helps you estimate your potential earnings from a HYSA by considering the Annual Percentage Yield (APY), compounding frequency, and deposit amount.
How High Yield Savings Accounts Work
A high yield savings account is a type of deposit account that offers higher interest rates than traditional savings accounts. These accounts are typically FDIC-insured up to $250,000 per depositor, per insured bank, for each account ownership category.
The key features of high yield savings accounts include:
- Higher interest rates than traditional savings accounts
- FDIC insurance coverage
- Access to funds (typically with some restrictions)
- No minimum balance requirements for most accounts
- Online account management
High yield savings accounts are a good option for individuals who want to earn more interest on their savings while maintaining easy access to their funds. They are particularly beneficial for:
- Emergency funds
- Short-term savings goals
- Additional savings beyond retirement accounts
Using the Calculator
Our calculator provides an easy way to estimate your potential earnings from a high yield savings account. Simply enter the following information:
- Initial deposit amount
- Annual Percentage Yield (APY)
- Term length (in years)
- Compounding frequency (daily, monthly, annually)
Click the "Calculate" button to see your estimated earnings and the total amount in your account after the specified term.
Formula Explained
The calculator uses the compound interest formula to calculate your potential earnings:
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 amount)
- r = the annual interest rate (APY)
- n = the number of times that interest is compounded per year
- t = the time the money is invested or borrowed for, in years
For daily compounding, n = 365. For monthly compounding, n = 12. For annual compounding, n = 1.
The earnings are calculated as the difference between the future value (A) and the principal (P).
Worked Example
Let's say you deposit $5,000 in a high yield savings account with a 3.5% APY, compounded monthly, for 2 years.
Using the formula:
Example Calculation
A = $5,000 × (1 + 0.035/12)12×2
A = $5,000 × (1 + 0.0029167)24
A ≈ $5,000 × 1.0728
A ≈ $5,364.00
Earnings = $5,364.00 - $5,000.00 = $364.00
After 2 years, you would have approximately $5,364.00 in your account, earning $364.00 in interest.
Frequently Asked Questions
What is the difference between APY and APR?
APY (Annual Percentage Yield) is the real rate of return earned on an investment, taking into account the effect of compounding interest. APR (Annual Percentage Rate) is the stated interest rate before compounding is taken into account.
How often is interest compounded in high yield savings accounts?
Most high yield savings accounts compound interest daily, monthly, or annually. The calculator allows you to select the compounding frequency to get an accurate estimate.
Are high yield savings accounts FDIC-insured?
Yes, high yield savings accounts are typically FDIC-insured up to $250,000 per depositor, per insured bank, for each account ownership category.
Can I withdraw money from a high yield savings account?
Most high yield savings accounts allow you to withdraw funds, but there may be restrictions on the number of withdrawals or the timing of withdrawals. Check with your bank for specific rules.