1. What is the High Yield Savings Calculator?

This calculator estimates the growth of your savings in a high-yield account with daily compounding interest, similar to those offered by online banks. It helps you project how your money can grow over time.

2. How Does the Calculator Work?

The calculator uses the daily compound interest formula:

Where:

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

Explanation: Interest is calculated daily (divided by 365) and compounded for each day over the investment period.

3. Importance of Compound Interest

Details: Daily compounding means you earn interest on both your principal and previously earned interest, accelerating growth compared to simple interest or less frequent compounding.

4. Using the Calculator

Tips: Enter your initial deposit, the APY (Annual Percentage Yield) rate, and time period. Rates typically range from 3-5% for high-yield savings accounts.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest paid in high-yield accounts?
A: Most pay interest monthly, though it compounds daily for more accurate growth calculation.

Q2: Are high-yield savings accounts safe?
A: Yes, when from FDIC-insured banks (up to $250,000 per depositor).

Q3: How does this compare to regular savings accounts?
A: High-yield accounts typically offer 10-20x higher interest than traditional savings (0.01-0.05%).

Q4: Are there limits on withdrawals?
A: Federal Regulation D limits certain withdrawals to 6 per month, though this was suspended during COVID.

Q5: Are there fees with these accounts?
A: Most online high-yield accounts have no monthly fees if you maintain a minimum balance (often $0-$100).