1. What is the High Yield Savings Calculator?

This calculator estimates the growth of your money in a high-yield savings account (like American Express) using daily compounding interest. It helps you project your savings growth over time.

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)
• \( t \) — Time in years

Explanation: The formula calculates daily compounding (365 times per year) which gives slightly better returns than simple annual compounding.

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 rates significantly higher than traditional savings accounts.

4. Using the Calculator

Tips: Enter your initial deposit amount, the annual percentage yield (APY) of the account (e.g., 4.25% for Amex), and the number of years you plan to keep the money in the account.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest compounded in high-yield savings accounts?
A: Most high-yield accounts, including Amex, compound interest daily and credit it monthly.

Q2: Are high-yield savings accounts safe?
A: Yes, they are FDIC-insured up to $250,000 per depositor, per institution.

Q3: How does this compare to regular savings accounts?
A: High-yield accounts typically offer 10-20x higher interest rates than traditional savings accounts.

Q4: Are there any fees or minimum balances?
A: Amex high-yield savings has no monthly fees and no minimum balance requirement.

Q5: How often do interest rates change?
A: Rates can change based on Federal Reserve policy and market conditions, though they tend to remain stable for extended periods.