1. What is 3.80% APY?

APY (Annual Percentage Yield) of 3.80% represents the real rate of return earned on savings, accounting for compound interest. This rate is typically offered by high-yield savings accounts and is significantly higher than traditional savings accounts.

2. How Does Daily Compounding Work?

The calculator uses the daily compounding formula:

Where:

• \( A \) — Final amount
• \( P \) — Principal investment
• \( 0.038 \) — 3.80% APY
• \( t \) — Time in years
• 365 — Compounding periods per year

Explanation: Interest is calculated daily and added to your balance, meaning you earn "interest on interest" throughout the year.

3. Benefits of High-Yield Savings

Details: At 3.80% APY, your money grows much faster than in standard accounts. For example, $10,000 would earn about $387 in the first year compared to just $10-$50 in traditional savings accounts.

4. Using the Calculator

Tips: Enter your initial deposit amount and the number of years you plan to save. The calculator shows both the final balance and total interest earned.

5. Frequently Asked Questions (FAQ)

Q1: Is 3.80% APY guaranteed?
A: While rates can change, high-yield savings accounts typically offer competitive rates that adjust with market conditions.

Q2: How often is interest paid?
A: Interest is usually compounded daily and paid monthly, though this varies by institution.

Q3: Are there fees or minimums?
A: Many high-yield accounts have no monthly fees and low minimums (often $0-$100).

Q4: How does this compare to CDs?
A: Savings accounts offer liquidity while CDs lock your money for fixed terms (often at slightly higher rates).

Q5: Is my money safe?
A: Funds are FDIC-insured up to $250,000 per depositor, per institution.