APY (Annual Percentage Yield) is the real annual return on a savings account or CD, including the effect of compounding. It is calculated as APY = (1 + r/n)^n - 1, where r is the nominal annual rate and n is the number of compounding periods per year. The more frequently interest compounds, the higher the APY relative to the nominal rate.

How is savings interest calculated?

Savings interest is calculated with the compound interest formula A = P(1 + r/n)^(n*t), where P is the principal (initial deposit), r is the annual interest rate, n is the compounding frequency per year, and t is the number of years. Total interest earned = A - P. For recurring deposits, a monthly contribution is added to the balance each month before compounding.

CD vs High-Yield Savings, which is better?

CDs (Certificates of Deposit) typically offer higher rates but lock your funds for a fixed term (1-60 months); early withdrawals usually incur a penalty. High-Yield Savings accounts offer slightly lower rates but let you withdraw anytime. Choose CDs for money you will not need soon and want maximum yield; choose High-Yield Savings when you need flexibility and liquidity.

Savings Interest Calculator | CD, High-Yield & Compound

Savings Parameters

Deposit Amount ($) Principal; for Recurring, this is the initial deposit plus monthly contributions

Account Type Selecting a type prefills a 2026 reference APY, term and compounding

APY (%) Nominal annual rate; Effective APY shown in results after compounding

Term

CD terms range 1-60 months; auto-filled per account type, editable

Compound Frequency How often interest is compounded (Recurring always compounds monthly)

Results

View savings interest formula

Compound interest: A = P × (1 + r/n)^n×t, where P = principal, r = nominal annual rate, n = compounding periods per year, t = years.
Effective APY: = (1 + r/n)ⁿ − 1. The more frequent the compounding, the higher the APY.
Total interest: = A − P (or A − total deposited for recurring).
Recurring deposit: each month the contribution is added to the balance first, then the monthly rate (r/12) is applied: balance = (balance + PMT) × (1 + r/12).

All amounts are formatted in USD with 2 decimals. Rates use 2026 US market reference values.

Account Type Comparison (your deposit · 2026 reference APY)

Account Type	APY	Total Interest	Final Balance

2026 US reference APY: actual rates vary by bank and change with the Fed funds rate. Typically online banks > credit unions > big national banks; CDs offer higher APY but lock funds until maturity.

Savings Account: ~0.45% (big banks) — highly liquid, low yield.
High-Yield Savings: ~4.50% (online banks) — liquid, competitive yield.
CD: ~4.00%-5.00% (1-60 months) — fixed term, early-withdrawal penalty.
Money Market: ~4.00% — check-writing access, tiered rates.
Recurring Deposit: ~4.50% — automated monthly savings, compounds monthly.

Savings Strategy (2026)

Emergency fund: keep 3-6 months of expenses in a High-Yield Savings or Money Market account for liquidity plus yield.
Short-term goals (under 1 year): use a 3-6 month CD or High-Yield Savings to lock in today's rates before they fall.
Mid-term funds (1-5 years): build a CD ladder — split across 1/2/3/5-year CDs so one matures each year, then reinvest.
Recurring deposits: automate monthly transfers right after payday to build savings without thinking about it.
FDIC insurance: deposits up to $250,000 per depositor, per bank, per ownership category are FDIC-insured; spread larger amounts across banks.

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