High-Yield Savings Calculator

• Converts between APY and APR so you can compare accounts quoted either way.
• Grows the balance month by month with your regular deposits and shows interest earned each year.
• Estimates interest after tax and the value of the balance in today's money after inflation.
• Compares your account with a low-rate account to show what the better rate is worth.

How to use this calculator

Enter your starting balance, how much you add each month, and the rate on the account. Say whether the rate you entered is an APY (what banks advertise) or an APR. Choose a time horizon, then adjust the tax rate and inflation under Advanced if you want the after-tax and real-value results.

APY versus APR

APR is the stated yearly rate before compounding. APY includes compounding, so it is the amount you actually earn over a year if the money stays put. Savings accounts compound daily or monthly, which makes APY slightly higher than APR:

APY = (1 + APR / n)^n - 1      (n = compounding periods per year)

Always compare accounts on APY. This calculator converts either way and uses monthly compounding for the balance simulation.

A worked example

Start with $10,000, add $300 a month for five years at 4% APY. The ending balance is about $32,020. You contributed $28,000, so interest earned is $4,020.

If that interest is taxed at 22%, you keep about $3,136. With inflation at 2.5%, the balance is worth about $28,301 in today's money. The same deposits in an account paying 0.40% would have earned about $3,641 less.

Taxes and inflation

Interest on a savings account is taxed as ordinary income in the year it is earned, even if you leave it in the account. Your bank reports it on Form 1099-INT. Inflation matters because a rate below the rate of inflation means your money buys less over time even as the balance grows. The "rate above inflation" figure shows how much real return you are earning.

Rates change

High-yield savings rates are variable. A bank can change the rate at any time, and rates generally move with the Federal Reserve's policy rate. This calculator holds the rate constant, which is useful for comparing options but means actual results may differ. Check that the account is FDIC-insured (or NCUA-insured at a credit union), and note the limit of $250,000 per depositor, per bank, per ownership category.

Assumptions and limitations

• Constant rate. Real accounts change their rates.
• Deposits at the end of each month. The simulation adds each deposit after that month's interest.
• Simple tax estimate. A single tax rate is applied to interest; state tax is not modelled separately.
• No fees or minimums. Some accounts charge fees or require minimum balances for the advertised rate.

Common mistakes

Comparing APR with APY. They are not the same number.

Chasing teaser rates. Some accounts advertise a high rate that applies only for a short period or up to a small balance.

Leaving an emergency fund in a low-rate account. Money you may need soon belongs somewhere safe, but it can still earn a competitive rate.

Forgetting tax. The rate you earn is not the rate you keep.

Frequently asked questions