A savings account that pays compound interest grows in two ways: from the deposits you add, and from interest that itself earns interest. This calculator shows both, modeling a starting balance plus regular monthly deposits at your account's rate.
The default reflects a high-yield savings account — $5,000 to start, $200 a month, 4.5% APY over 10 years. Set the rate to your account's APY to see your own numbers.
How savings account interest compounds
Most savings accounts compound daily and pay the interest into your balance monthly. Each deposit you make starts earning from the day it lands, and the interest you've already earned earns more — the snowball that makes compounding worthwhile even at modest rates.
Because the rate on a savings account can change over time (unlike a fixed CD), treat the projection as a snapshot at today's rate. If rates rise or fall, rerun the numbers.
APY: the number that matters
Banks quote savings accounts by their APY, which already includes daily compounding — so APY is the figure to compare when you shop for an account. The difference between a traditional account paying near 0.5% and a high-yield account paying 4–5% is enormous over time, and it costs nothing to choose the better one.
The results above show the effective annual yield for your inputs, so you can confirm what a quoted rate really earns once compounding is counted.
High-yield vs traditional savings
High-yield savings accounts — often from online banks — frequently pay many times the rate of a big-bank account, with the same FDIC insurance and full access to your money. For an emergency fund or any cash you want safe and liquid, that higher APY is close to free money.
Savings accounts are ideal for short-term needs and cash you can't risk. For money you won't touch for many years, investing has historically earned more, and a fixed-term CD can lock in a rate if you don't need access. Use the what-if chips and the cost-of-waiting view to see how much earlier saving changes the outcome.
Frequently asked questions
How much interest will I earn in a savings account?
It depends on your balance, deposits, and APY. For example, $5,000 plus $200 a month at 4.5% over 10 years earns several thousand dollars in interest. Enter your own figures above for an exact projection.
Is savings account interest compounded daily?
Usually, yes — most savings accounts compound interest daily and credit it monthly. The calculator is set to daily compounding by default to match.
What is a high-yield savings account?
It's a savings account, often from an online bank, that pays a much higher APY than a typical big-bank account — frequently several percent — with the same FDIC insurance and full access to your money.
How is APY different from the interest rate?
The interest rate is the base (nominal) rate; APY is what you actually earn once compounding is included. APY is always at least as high as the nominal rate and is the right number for comparing accounts.
Worked examples
Each example below shows inputs fed directly into the compound interest engine — outputs are computed at build time, not hand-typed.
Savings account with regular deposits
$3,000 starting balance, $200 added each month, at 4.5% APY compounded monthly for 3 years.
Total deposits of $10,200 grow to about $11,100 — earning roughly $900 in interest over 3 years. At a traditional 0.46% APY, the same deposits would earn about $72, making the HYSA worth roughly $828 more over 3 years.
Small balance, consistent saving
$1,000 starting balance, $100 added each month, at 4.5% APY compounded monthly for 5 years.
Starting small and staying consistent: $7,000 total deposited over 5 years grows to about $7,950 — earning nearly $950 in interest. Consistency matters more than starting size; this habit compounds over time.
More questions answered
How does compound interest work in a savings account?
Each month, the bank calculates interest on your current balance (including previously earned interest) and credits it to your account. In the next month, you earn interest on the larger balance. This creates a feedback loop: interest earns interest, and the growth rate accelerates over time. On short horizons (1–2 years) the compounding effect is modest; over 10+ years it becomes the dominant factor in your ending balance.
Is it better to save monthly or in a lump sum?
Both have value. A lump sum starts compounding immediately on the full amount. Regular monthly contributions build discipline and benefit from dollar-cost averaging in investment accounts. For savings goals with a specific deadline, the savings goal calculator lets you compare the two approaches directly — it shows the monthly contribution needed to hit your target by a given date.