Savings Account Yield Calculator
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Reviewed by Calculator Editorial Team
Use this savings account yield calculator to determine your potential earnings from a savings account. Simply enter your deposit amount, annual interest rate, and compounding frequency to calculate your earnings over time.
How to Use This Calculator
To calculate your savings account yield:
- Enter the principal amount (initial deposit) in dollars.
- Input the annual interest rate as a percentage.
- Select how often your interest is compounded (annually, monthly, daily, etc.).
- Enter the number of years you plan to keep the money in the account.
- Click "Calculate" to see your potential earnings.
The calculator will display your total amount after interest and the total interest earned. You can also view a chart showing your balance growth over time.
Formula Used
The savings account yield is calculated using 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
The total interest earned is calculated as:
Interest = A - P
Worked Example
Let's say you deposit $1,000 in a savings account with an annual interest rate of 3%, compounded monthly, for 5 years.
- Principal (P) = $1,000
- Annual interest rate (r) = 3% or 0.03
- Compounding frequency (n) = 12 (monthly)
- Time (t) = 5 years
Using the formula:
A = 1000(1 + 0.03/12)12×5
A ≈ $1,159.27
Total interest earned = $1,159.27 - $1,000 = $159.27
APR vs APY Comparison
Annual Percentage Rate (APR) is the simple annual interest rate, while Annual Percentage Yield (APY) takes into account compounding and shows the actual return on your investment.
| APR | APY (Monthly Compounding) |
|---|---|
| 3% | 3.04% |
| 5% | 5.12% |
| 7% | 7.29% |
Notice how the APY is always higher than the APR for the same interest rate when compounding is applied.
Frequently Asked Questions
What is the difference between APR and APY?
APR is the simple annual interest rate, while APY is the effective annual rate that takes into account compounding. APY will always be higher than APR for the same interest rate when compounding is applied.
How often should interest be compounded?
The more frequently interest is compounded, the higher your returns. Most savings accounts compound interest monthly, but some offer daily or even continuous compounding.
Is it better to have a higher APR or APY?
APY is generally better because it shows the actual return on your investment after accounting for compounding. A higher APY means you'll earn more interest over time.