1. What is the High Yield Savings Calculator?

This calculator estimates the growth of your money in a high-yield savings account (like Amex's) using daily compounding interest. It helps you project how your savings will grow over time with a fixed APY.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount ($)
• \( P \) — Principal amount ($)
• \( r \) — Annual interest rate (decimal, e.g., 0.0425 for 4.25%)
• \( t \) — Time in years

Explanation: The formula calculates daily compounding by dividing the annual rate by 365 and compounding for each day over the investment period.

3. Importance of Compound Interest

Details: Compound interest allows your money to grow exponentially over time as you earn interest on both your principal and accumulated interest. High-yield savings accounts typically offer much better returns than traditional savings accounts.

4. Using the Calculator

Tips: Enter your initial deposit amount, the annual percentage yield (APY) as a decimal (e.g., 0.0425 for 4.25%), and the number of years you plan to save. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How often do high-yield savings accounts compound?
A: Most high-yield savings accounts, including Amex's, compound interest daily and pay it monthly.

Q2: Is the APY guaranteed to stay the same?
A: No, APYs can change based on market conditions. This calculator assumes a fixed rate over the entire period.

Q3: Are there any fees with high-yield savings accounts?
A: Most high-yield accounts have no monthly fees, but check with your specific bank for any account requirements.

Q4: How does this compare to CD accounts?
A: CDs typically offer slightly higher rates but require locking up your money for a set term, while savings accounts offer liquidity.

Q5: Are high-yield savings accounts FDIC insured?
A: Yes, accounts at FDIC-member banks (like Amex) are insured up to $250,000 per depositor.