High-yield savings accounts earn significantly more interest than their traditional savings account counterparts.
In fact, while the Federal Reserve reports that the average savings deposit rate is only 0.40%—and major banks like Chase and Wells Fargo offer savings accounts with only 0.01% APY—high-yield savings accounts (HYSAs) pay around 4.00%, give or take.
How big of a difference will that make on your finances? Use our high-yield savings account calculator to determine just how much interest you’ll earn over time by keeping your savings in a high-yield account instead of an account earning virtually nothing.
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High-yield savings account calculator definitions
Before using our high-yield savings account calculator, familiarize yourself with some basic terminology:
Starting balance
Starting balance refers to the initial deposit you make into your savings account.
Years to grow
This refers to the number of years you leave your savings untouched so they can grow. For instance, if you’re working on buying a house in three years and saving for a down payment, your account has three years to grow before you need to touch those savings.
Annual interest rate
This is the annual percentage rate (APY) advertised by the bank. This is the rate at which interest accrues over the course of one year.
The high-yield savings account calculator gives you an idea of how your money will grow with a bank’s current APY, but keep in mind that banks can and do change these over time.
Monthly contribution
Not only does your savings grow with interest, but it can also grow as you deposit more money into the account. For instance, if you earn $1,000 a month and can afford to deposit 20%, or $200, of that money into your high-yield savings account each month, your monthly contribution is $200.
This number may not always be constant. For instance, you may have a high car insurance premium every six months that keeps you from making the typical monthly contribution. You might also actually withdraw money from savings occasionally, like to cover an emergency expense.
Compounding frequency
Compounding refers to each time your money earns interest. Savings accounts may compound quarterly, monthly, or even daily.
The more often an account compounds, the more you stand to earn. That’s because, when your account compounds, your new balance is the money already in your account plus the new interest you’ve just earned. Now you’ll start to earn interest on that new, higher amount.
For instance, if an account compounds monthly, you’ll earn interest on your initial deposit in the first month, but in the second month, you’ll earn interest on the initial amount plus the interest you earned at the end of the first month. This accelerates your savings growth.
How to use a high-yield savings account calculator
To use this high-yield savings account calculator, start by choosing a bank that offers a HYSA. Then, fill out all the fields with information about how much you’ll deposit initially (and how much you’ll contribute each month), the current APY at that bank, and the number of years you’ll leave the savings untouched.
The calculator will show you what the actual balance would be at the end of that time period, assuming monthly contributions and the annual interest rate remain the same. You’ll be able to see both how much you contributed over time (total principal contributed) and how much extra money you earned (total interest earned).
If you’re trying to choose a HYSA, enter in the APYs of multiple accounts to see how much of a difference one bank account will make in your savings over another.
How to choose a high-yield savings account
To choose the best high-yield savings account, you’ll want to compare more than just the APY. While high interest rates should be a crucial factor in making your decision, there are other factors to consider as well.
For example, Capital One earns the highest rating in our research not just because it offers a high yield, but also because it provides an exceptional mobile experience.
Here’s everything to take into account when selecting a HYSA:
- APY: Which high-yield savings account has the highest APY? How much of a difference does that APY make over time? (Use our high-yield savings account calculator to determine this.)
- Sign-up bonus: Do any banks offer a sign-up bonus? How much money can you make, and what are the requirements to earn it?
- Mobile app ratings: Mobile banking is important in today’s world. Choose a bank that has an easy-to-use app with stellar reviews.
- Fees: What fees does each account charge? Are there any accounts without fees?
- Minimum balance requirements: Does the high-yield savings account have a high minimum balance requirement? If so, can you meet it?
- Checking account: Do you already have a checking account somewhere? How easy is it to link the high-yield savings account to this checking account? Is it possible to have both accounts with the same bank? Check out our recommendations for the best checking accounts.
Article sources
At LendEDU, our writers and editors rely on primary sources, such as government data and websites, industry reports and whitepapers, and interviews with experts and company representatives. We also reference reputable company websites and research from established publishers. This approach allows us to produce content that is accurate, unbiased, and supported by reliable evidence. Read more about our editorial standards.
- Federal Reserve, National Rates and Rate Caps
- Wells Fargo, Way2Save Interest Rates
- Chase, Chase Savings Interest Rates
About our contributors
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Written by Timothy Moore, CFEI®Timothy Moore is a Certified Financial Education Instructor (CFEI®) specializing in bank accounts, student loans, taxes, and insurance. His passion is helping readers navigate life on a tight budget.
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Edited by Amanda HankelAmanda Hankel is a managing editor at LendEDU. She has more than seven years of experience covering various finance-related topics and has worked for more than 15 years overall in writing, editing, and publishing.