1. What is the Compound Interest Formula?

The compound interest formula calculates how money grows over time with interest being added to both the principal and accumulated interest. Fidelity Bank's high yield savings accounts use this compounding method, though typically with lower APY compared to some competitors.

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

Where:

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

Explanation: More frequent compounding (higher n) results in slightly higher returns. Fidelity typically compounds interest monthly (n=12).

3. Importance of Compounding

Details: Compounding allows your savings to grow exponentially over time. Even with Fidelity's relatively low rates, consistent saving and compounding can significantly increase your balance.

4. Using the Calculator

Tips: Enter principal in dollars, annual rate as decimal (e.g., 0.01 for 1%), time in years, and compounding frequency (12 for monthly). All values must be positive.

5. Frequently Asked Questions (FAQ)

Q1: What's Fidelity's typical high yield savings rate?
A: Rates vary but are often around 0.01-0.05 APY (0.0001-0.0005 in decimal), much lower than online banks.

Q2: How often does Fidelity compound interest?
A: Most Fidelity savings accounts compound interest monthly (n=12 in the formula).

Q3: Are there fees that affect the calculation?
A: Fidelity may charge monthly fees if balance requirements aren't met, which would reduce actual returns.

Q4: Is this calculator accurate for Fidelity accounts?
A: It provides theoretical growth; actual returns may differ slightly due to rate changes or fees.

Q5: How can I maximize my savings with Fidelity?
A: Consider Fidelity's money market funds or CDs for potentially higher yields than their savings accounts.