Nerdwallet Savings Account Interest Calculator
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Reviewed by Calculator Editorial Team
Use this NerdWallet Savings Account Interest Calculator to determine how much interest you'll earn on your savings account over time. Compare different interest rates, compounding frequencies, and account balances to find the best savings option.
How to Use This Calculator
To calculate your savings account interest, follow these simple steps:
- Enter your initial deposit amount in the "Initial Deposit" field.
- Select your annual interest rate from the "Annual Interest Rate" dropdown.
- Choose the compounding frequency from the "Compounding Frequency" dropdown.
- Enter the number of years you plan to keep the money in the savings account.
- Click the "Calculate" button to see your results.
The calculator will display your total balance after the specified period, the total interest earned, and a chart showing your growth over time.
APR vs APY: What's the Difference?
When comparing savings accounts, you'll often see two different interest rate terms: APR (Annual Percentage Rate) and APY (Annual Percentage Yield).
Key Difference
APR is the simple interest rate, while APY includes the effect of compounding interest. APY is always higher than APR for accounts that compound interest.
For example, if a savings account offers a 1% APR with monthly compounding, the APY would be approximately 1.04% because the interest is compounded monthly.
Understanding Compound Interest
Compound interest is the process where interest is calculated on the initial principal and also on the accumulated interest of previous periods. This can significantly increase your savings over time.
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 example, if you deposit $1,000 at 5% annual interest rate compounded annually for 10 years, your balance would grow to approximately $1,628.89.
Savings Account Comparison Table
Use this table to compare different savings account options based on their interest rates and compounding frequencies.
| Account Type | APR | APY | Compounding Frequency | Minimum Deposit |
|---|---|---|---|---|
| High-Yield Savings | 4.00% | 4.04% | Monthly | $100 |
| Online Savings | 3.50% | 3.54% | Monthly | $1 |
| CD (Certificate of Deposit) | 4.25% | 4.25% | Annually | $1,000 |
| Money Market Account | 3.75% | 3.79% | Daily | $250 |
Note: Interest rates are approximate and may change. Always check with the financial institution for the most current rates and terms.
Frequently Asked Questions
How often is interest calculated in a savings account?
Interest in savings accounts is typically calculated and added to your balance on a daily, monthly, or annual basis, depending on the account type and financial institution.
Can I withdraw money from a savings account without penalties?
Most savings accounts allow unlimited withdrawals without penalties. However, some high-yield savings accounts may have withdrawal limits or require maintaining a minimum balance.
What is the difference between a savings account and a checking account?
Savings accounts typically offer higher interest rates and are designed for storing money you don't need to access frequently. Checking accounts usually have lower interest rates and are better for everyday transactions.
How do I find the best savings account for my needs?
To find the best savings account, compare interest rates, fees, minimum deposit requirements, and withdrawal limits from different financial institutions. Consider your financial goals and how often you plan to access your funds.
This calculator provides estimates for informational purposes only. Actual results may vary based on specific account terms, fees, and market conditions. Always review the terms and conditions of your savings account before opening one.