High Yield Savings Calculator Marcus CD Rates

Compound Interest Formula:

\[ A = P \times \left(1 + \frac{r}{365}\right)^{365 \times t} \]

Principal Amount (P):

Annual Interest Rate (r):

Time Period (t):

years

Account Type:

Final Amount (A):

Interest Earned:

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1. What is the High Yield Savings Calculator?

This calculator helps you estimate the growth of your money in high-yield savings accounts or CDs (Certificates of Deposit) using daily compounding interest. It's particularly tailored for Marcus by Goldman Sachs rates (4.40% for savings, 4.20% for CDs as of 2023).

2. How Does the Calculator Work?

The calculator uses the compound interest formula:

\[ A = P \times \left(1 + \frac{r}{365}\right)^{365 \times t} \]

Where:

$ A $ — Final amount ($)
$ P $ — Principal amount ($)
$ r $ — Annual interest rate (decimal)
$ t $ — Time in years

Explanation: The formula calculates how much your money grows with daily compounding, which means interest is calculated on your principal plus previously earned interest every day.

3. Importance of Compound Interest

Details: Compound interest allows your savings to grow exponentially over time. The higher the interest rate and the longer the time period, the more significant the growth becomes due to the "snowball effect."

4. Using the Calculator

Tips: Enter your initial deposit amount, select either the high-yield savings rate (4.40%) or CD rate (4.20%), and specify the number of years you plan to keep the money invested. The calculator will show your final balance and total interest earned.

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between high-yield savings and CDs?
A: High-yield savings accounts offer liquidity (you can withdraw anytime), while CDs typically offer slightly higher rates but require you to lock in your money for a fixed term.

Q2: Are these rates guaranteed?
A: No, interest rates can change over time. The calculator uses current rates for estimation purposes.

Q3: How often is interest compounded?
A: This calculator assumes daily compounding, which is common for high-yield savings accounts and CDs.

Q4: Are there any fees or taxes to consider?
A: Most high-yield accounts have no fees, but interest earned is typically taxable as ordinary income.

Q5: Can I add monthly contributions?
A: This calculator assumes a one-time deposit. For recurring contributions, you would need a different formula that accounts for regular deposits.