1. What is the High Savings Yield Calculator?

This calculator helps you estimate the growth of your money in a high-yield savings account in Canada using daily compounding interest. It's particularly useful for comparing different savings account offers.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

• \( A \) — Final amount (CAD)
• \( P \) — Principal investment (CAD)
• \( r \) — Annual interest rate (decimal)
• \( t \) — Time in years

Explanation: The formula accounts for daily compounding (365 times per year), which is common for Canadian high-yield savings accounts.

3. Importance of Compound Interest

Details: Compound interest allows your savings to grow exponentially over time, as you earn interest on both your principal and accumulated interest. This is particularly powerful in high-yield accounts with competitive interest rates.

4. Using the Calculator

Tips: Enter your initial deposit in CAD, the annual interest rate (APY) as a percentage (e.g., 4.5 for 4.5%), and the number of years you plan to save. The calculator will show your projected balance and total interest earned.

5. Frequently Asked Questions (FAQ)

Q1: What's a good interest rate for a high-yield savings account in Canada?
A: As of 2024, rates between 4-5% APY are considered competitive, though rates vary by institution and economic conditions.

Q2: How often is interest compounded in Canadian savings accounts?
A: Most Canadian high-yield savings accounts compound interest daily and pay it monthly.

Q3: Are high-yield savings accounts taxable in Canada?
A: Yes, interest earned is considered taxable income and must be reported on your annual tax return.

Q4: What's the difference between APR and APY?
A: APR doesn't account for compounding, while APY does. Savings accounts typically advertise APY.

Q5: Are there limits on withdrawals from high-yield savings accounts?
A: Some accounts may have transaction limits or require minimum balances to earn the highest rates.