1. What is Compound Interest?

Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods. Schwab Bank's high yield savings account compounds interest daily, helping your money grow faster over time.

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 for (years)

Explanation: The more frequently interest is compounded, the greater the return, especially over longer periods.

3. Schwab Bank High Yield Savings

Details: Schwab Bank currently offers a competitive APY (Annual Percentage Yield) of 0.45% (as of 2023) with daily compounding. This calculator helps project your savings growth with their high yield account.

4. Using the Calculator

Tips: Enter your initial deposit, the interest rate (default is 0.45% for Schwab), investment period in years, and compounding frequency (daily recommended for Schwab accounts).

5. Frequently Asked Questions (FAQ)

Q1: How does Schwab's rate compare to regular savings?
A: Schwab's 0.45% APY is significantly higher than the national average of 0.06% for traditional savings accounts.

Q2: Is there a minimum balance requirement?
A: Schwab Bank has no minimum balance requirement for their high yield savings account.

Q3: How often is interest paid?
A: Interest is compounded daily and credited to your account monthly.

Q4: Are there any fees?
A: Schwab Bank charges no monthly maintenance fees for their high yield savings account.

Q5: How does compounding frequency affect returns?
A: Daily compounding (n=365) yields slightly more than monthly (n=12) due to more frequent interest calculations.