High-Yield Savings Account Calculator: Maximize Your Savings Potential

No matter what your financial goals are, saving money is probably at the top of your list. Having money saved offers greater financial security — meaning less stress and more opportunities.

Putting your money into a high-yield savings account is a popular option for saving. And with a high-yield savings account calculator, you can figure out exactly how much your money will grow. Learn how to use one of these calculators to estimate your interest earnings in this guide.

What Is a High-Yield Savings Account and How Does It Work?

A high-yield savings account is like a traditional savings account, but it offers a higher rate of return on the money you store in it.

Currently, the national average interest rate on traditional savings accounts is 0.41%. By comparison, several financial institutions are offering high-yield savings accounts with interest rates above 3%.

High-yield savings accounts aren’t your only option for growing your savings, but they do have distinct advantages over other banking accounts and investments.

Unlike certificates of deposit (CDs), high-yield savings leave your funds liquid. If you need the money you deposited, you can easily access it without penalties.

As with regular savings accounts, your deposits in a high-yield savings account are also safe. If your account is through a credit union, the National Credit Union Administration (NCUA) insures your deposits up to $250,000. Similarly, if you’re using a bank, the Federal Deposit Insurance Corporation (FDIC) insures your deposits up to $250,000.

Why Use a High-Yield Savings Account Calculator?

Making heads or tails of lists of accounts, interest rates, and the many other factors involved can make anyone’s head spin. Luckily, a high-yield savings account calculator can make your choice a breeze.

The calculator will take the details you enter and show you how much you’ll earn in interest over time. You can watch how the account balance grows when you adjust the different numbers. From there, it’s a simple process to figure out how much you need to deposit each month to hit your savings goal and how long it will take to reach.

Increasing your monthly deposits by $50 might not seem like much, but a high-yield savings account calculator will show you how the small extra amount compounds and makes a big difference. Assuming a 3% return compounded daily and an initial deposit of $1,000, you'd have $1,030.45 at the end of your first year if you made no monthly deposits. If you keep everything the same but also start making $50 monthly deposits, you'd have $1,639.52 at the end of the year!

How To Use a High-Yield Savings Account Calculator

Enter these key details into the calculator to determine your high-yield savings account growth over time:

• Initial deposit amount
• Monthly deposits
• Annual percentage yield
• Compounding frequency (daily, monthly, annually)
• Time period

The initial deposit is how much you add to your high-yield savings account when you open it. Some accounts have a minimum balance requirement, so you would need to deposit at least that much to open the account.

If you plan to make additional monthly deposits, put that amount in the calculator, too. These extra deposits will grow your savings balance and lead to higher interest payments.

The annual percentage yield (APY) is the interest rate you earn on your deposits. You also need to enter the compounding frequency, which is how often the account provider calculates your interest payments and adds them to your account balance.

Finally, enter the amount of time you’re going to let your savings grow. As you play around with this number, you’ll see that time makes the biggest difference in growing your savings. The interest keeps compounding, leading to a larger savings balance over time as long as you don’t withdraw money.

Factors That Influence Your Savings Growth

Several factors play major roles in your savings growth, such as your account's interest rate and your contribution frequency. Understanding these elements will help you choose the right account and maximize your savings.

How APY and Compounding Impact Interest Earnings

Your interest rate determines how much you earn every time your financial institution calculates your interest payment. Higher APYs mean higher interest payments and faster growth for your account.

But how much of a difference does a percentage point really make?

Say you deposit $10,000 in a high-yield savings account with an APY of 4%. It compounds monthly, and you make no monthly contributions. The high-yield savings account calculator for monthly compounding shows that after three years, your balance will be $11,272.72, meaning you earned $1,272.72 in interest.

If everything about this account stayed the same except it had a 5% APY, your account balance would be $11,614.72 after three years. That’s $1,614.72 in interest, over $340 more than you would earn in the account with the 4% APY.

Compounding more frequently also makes your savings grow faster because you’re getting interest added to your account more often. That interest starts to earn interest, and so on, each time the interest is compounded.

The Effect of Contribution Amounts and Frequency

Along the same lines, regularly contributing money to your account via direct deposit or other deposit options will grow your savings more quickly. The more frequently you make deposits, the more your balance will grow, and the more you’ll earn in interest with each compounding.

You also won’t have to worry about minimum balance fees if you’re making frequent deposits that keep your account above the required minimum.

Finding the Best High-Yield Savings Account

You have to weigh each of these factors when you’re evaluating different high-yield savings accounts. An account with a slightly higher APY might look more appealing, but if it compounds less frequently than other options, your money may actually grow faster elsewhere.

Also, consider the financial institution providing the account. Beyond the key details about high-yield savings accounts, check whether they offer strong customer service and convenient features like banking apps if that’s important to you.

Making the Most of Your High-Yield Savings

You don’t have to do all this investigating into different high-yield savings accounts alone. MoneyAtlas creates comprehensive comparisons of financial products like high-yield savings accounts so you can easily find your perfect fit. Check out your savings account options to start growing your savings today.