Calculate Interest Saving Account
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Reviewed by Calculator Editorial Team
Calculate the interest earned on a savings account using our free online calculator. Learn how compound interest grows your money over time and how to maximize your savings.
How to Use This Calculator
Using our savings interest calculator is simple. Just enter the following information:
- Principal amount (the initial deposit)
- Annual interest rate (APR)
- Compounding frequency (how often interest is calculated)
- Time period (in years)
Click "Calculate" to see your final amount and the interest earned. The calculator will also show you a chart of your savings growth over time.
How Interest on Savings Accounts Works
Savings accounts earn interest, which is essentially money you earn on your money. The interest is calculated based on the principal amount and the interest rate. The more money you save and the higher the interest rate, the more interest you'll earn.
Interest can be calculated in different ways, depending on the compounding frequency:
- Simple interest: Interest is calculated only on the original principal
- Compound interest: Interest is calculated on the initial principal and also on the accumulated interest of previous periods
Most savings accounts use compound interest, which means your money grows faster over time. The more frequently interest is compounded, the more your money will grow.
The Formula
The formula for calculating compound interest is:
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 simple interest, the formula is simpler:
A = P(1 + rt)
Worked Examples
Example 1: Compound Interest Calculation
Suppose you deposit $1,000 in a savings account with an annual interest rate of 5%, compounded quarterly, for 3 years.
Using the formula:
A = 1000(1 + 0.05/4)^(4×3)
A = 1000(1.012629)^12
A ≈ $1,194.77
You would have $1,194.77 after 3 years, earning $194.77 in interest.
Example 2: Simple Interest Calculation
If you deposit $500 at a simple interest rate of 3% for 2 years:
A = 500(1 + 0.03×2)
A = 500(1.06)
A = $530.00
You would have $530.00 after 2 years, earning $30.00 in interest.
Frequently Asked Questions
What is the difference between simple and compound interest?
Simple interest is calculated only on the original principal amount, while compound interest is calculated on the original principal and also on the accumulated interest of previous periods. Compound interest typically results in higher returns over time.
How often is interest compounded in savings accounts?
Most savings accounts compound interest daily, monthly, or annually. The more frequently interest is compounded, the more your money will grow over time.
Can I calculate interest manually without a calculator?
Yes, you can use the formulas provided in this guide to calculate interest manually. However, using an online calculator like this one can save time and reduce the chance of calculation errors.
What factors affect the amount of interest I earn?
The amount of interest you earn depends on the principal amount, the interest rate, the compounding frequency, and the time period. Higher principal amounts, higher interest rates, more frequent compounding, and longer time periods will all result in more interest earned.