Current High Yield Savings Rates Calculator with Interest

Compound Interest Formula:

\[ Interest = P \times (1 + \frac{r}{n})^{(n \times t)} - P \]

Principal (P):

Annual Interest Rate (r):

Compounding Periods per Year (n):

Time (t):

years

Interest Earned:

Total Value:

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1. What is Compound Interest?

Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods. It allows savings to grow at an accelerating rate compared to simple interest.

2. How the Calculator Works

The calculator uses the compound interest formula:

\[ Interest = P \times (1 + \frac{r}{n})^{(n \times t)} - P \]

Where:

$ P $ — Principal amount (initial investment)
$ r $ — Annual interest rate (decimal)
$ n $ — Number of compounding periods per year
$ t $ — Time the money is invested for (years)

Example: $10,000 at 4.6% APY compounded monthly for 5 years would earn $2,531.81 in interest.

3. Current High-Yield Savings Rates

Current Rates (2023): Top high-yield savings accounts offer 4.00%-5.00% APY, significantly higher than traditional savings accounts (0.01%-0.10%).

4. Using the Calculator

Tips: Enter principal amount, current APY (default is 4.60%), select compounding frequency (monthly is typical for savings accounts), and investment period.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APY and APR?
A: APY includes compound interest while APR does not. APY gives the true rate of return.

Q2: How often do savings accounts compound?
A: Most high-yield savings accounts compound interest daily and pay monthly.

Q3: Are high-yield savings accounts safe?
A: Yes, when from FDIC-insured banks (up to $250,000 per depositor).

Q4: Why does compounding frequency matter?
A: More frequent compounding results in slightly higher returns.

Q5: How does this compare to CD or money market rates?
A: CDs often offer slightly higher rates but lock up funds. Money markets may offer check-writing privileges.