Overview
- A savings calculator uses inputs such as your balance, annual percentage yield (APY), time period, and additional contributions to estimate future earnings.
- APY accounts for the effects of compounding, making it a useful figure for comparing the earning potential of deposit accounts.
- Even a relatively small difference in APY can produce a meaningful difference in interest earnings over time, particularly on larger balances.
- EverBank Performance® Savings offers a competitive APY with $0 to open and no monthly maintenance fee.
A savings calculator uses inputs such as your starting balance, annual percentage yield (APY), time period, and any additional contributions to estimate how much your savings could grow. A higher APY and more time on deposit can increase your potential earnings. Comparing projected earnings at different APYs makes it easier to evaluate savings accounts if your goal is building an emergency fund, saving for something specific, or simply earning more on your cash.
What factors affect how much your savings grow?
Annual Percentage Yield (APY)
APY is one of the key factors in determining how much interest a savings account can earn. With the same balance and time period, an account with a higher APY will produce greater projected interest earnings if the APYs remain unchanged. When using a savings calculator, you can model the same balance at different APYs to compare the potential results.
Compounding frequency
Compounding frequency describes how often earned interest is added to an account balance. Interest may compound daily, monthly or on another schedule. Because APY incorporates the effects of compounding, it provides a standardized figure for comparing the annual earning potential of deposit accounts with different compounding schedules.
In general, the more frequently interest compounds, the more opportunity your savings have to grow because interest begins earning interest sooner. For example, daily compounding can produce slightly higher returns than monthly or quarterly compounding when the interest rate and other factors are the same. However, the difference may be modest, particularly over shorter periods or with smaller balances.
Contributions over time
Regular contributions can increase the amount available to earn interest over time. A high-yield savings account calculator with a monthly contribution field can show how recurring deposits may affect the projected balance.
Time on deposit
Time also affects projected interest earnings. Assuming the balance and APY remain unchanged, funds held on deposit for a longer period have more time to earn interest. A savings calculator can model different time horizons. Comparing savings accounts against fixed-rate certificates of deposit (CDs) can also help illustrate the difference between variable-rate access and a fixed rate for a defined term.
How does a savings calculator work?
A savings calculator uses inputs such as your starting balance, APY, time period, and additional contributions to estimate your ending balance and interest earnings. Because APY already reflects the effects of compounding over one year, an APY-based calculator does not require compounding frequency as a separate input.
How to use a HYSA savings calculator: a worked example
Suppose you deposit $10,000 in a high-yield savings account with a hypothetical 4.00% APY. The following examples illustrate how the balance could grow if the APY remained constant and no additional deposits or withdrawals were made.
| Period | Starting balance | Estimated interest earned | Ending balance |
|---|---|---|---|
| 1 year | $10,000 | ~$400 | ~$10,400 |
| 3 years | $10,000 | ~$1,249 | ~$11,249 |
| 5 years | $10,000 | ~$2,167 | ~$12,167 |
A $25,000 starting balance at the same APY would look like this:
| Period | Starting balance | Estimated interest earned | Ending balance |
|---|---|---|---|
| 1 year | $25,000 | ~$1,000 | ~$26,000 |
| 3 years | $25,000 | ~$3,122 | ~$28,122 |
| 5 years | $25,000 | ~$5,416 | ~$30,416 |
These projections are illustrative and assume the APY remains constant throughout the period shown. The APY on a variable-rate savings account can change, so actual earnings may be higher or lower. Additional deposits, withdrawals, and other account activity can also affect actual results.
Modeling your savings with EverBank
The EverBank Performance Savings account offers a competitive APY with interest compounded daily. There is no monthly maintenance fee, no minimum balance requirement, and it costs $0 to open. To estimate potential earnings, view the current APY and enter it into a savings calculator along with your starting balance, time period, and any planned contributions.
Frequently asked questions
How does a savings calculator work?
A savings calculator uses inputs such as your starting balance, APY, time period, and additional contributions to estimate your ending balance and interest earnings. Because rates on variable-rate savings accounts can change, the result is an estimated projection rather than a guarantee of future earnings.
What is a good APY for a savings account?
A competitive APY can be evaluated by comparing current rates from multiple institutions and reviewing the latest national average published by the FDIC. Because savings rates can change, use the current figures when making comparisons. An APY calculator can show the estimated dollar difference between two rates using the same balance and time period.
Does compounding frequency affect how much I earn?
Compounding frequency affects how often earned interest is added to your balance. However, APY already incorporates the effects of compounding, which is why it is useful for comparing the annual earning potential of deposit accounts. Two accounts with the same APY would produce the same interest earnings even if their compounding schedules differ.
Can I use a savings calculator to model regular contributions?
Many savings calculators include an optional field for recurring contributions. Adding the amount and frequency of planned deposits can provide a more detailed projection of how your balance may change over time. Actual results will depend on the time of deposits and any changes to the account's APY.
What inputs do I need for a HYSA calculator?
A HYSA calculator typically uses your starting balance, APY, and the time period you want to model. Some calculators also allow you to include recurring contributions.
Related terms
- Annual percentage yield (APY): A standardized measure of how much interest a deposit account can earn over one year, including the effects of compounding.
- Compound interest: Interest earned on both the principal and previously accumulated interest.
- Principal: The original amount deposited into a savings account before any interest is added.
- Variable rate: An interest rate that can change over time.
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