1. What is the Highest Yield Savings Calculator?

This calculator demonstrates how money grows in a high-yield savings account with daily compounding interest. It uses current top APY rates (like Axos Bank's 4.66% as of 2023) to show maximum potential earnings.

2. How Does the Calculator Work?

The calculator uses the daily compounding formula:

Where:

• \( A \) — Final amount ($)
• \( P \) — Principal investment ($)
• \( r \) — Annual interest rate (decimal, e.g., 0.0466 for 4.66%)
• \( t \) — Time in years

Explanation: The formula calculates interest earned when compounded daily (365 times per year), which yields slightly more than monthly or annual compounding.

3. Importance of Daily Compounding

Details: Daily compounding means interest is calculated and added to your balance every day, allowing your interest to earn additional interest more frequently than with monthly or annual compounding.

4. Using the Calculator

Tips: Enter your initial deposit in dollars, the annual interest rate as a decimal (e.g., 4.66% = 0.0466), and the number of years you plan to save. The calculator will show your projected balance.

5. Frequently Asked Questions (FAQ)

Q1: How does this compare to regular savings accounts?
A: Regular savings accounts typically offer much lower rates (often below 0.5% APY), while high-yield accounts offer rates 10x higher or more.

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

Q3: How often do rates change?
A: Rates fluctuate with the federal funds rate. This calculator uses current top rates but check for updates.

Q4: Are there any drawbacks?
A: Some high-yield accounts may have minimum balance requirements or limited withdrawals.

Q5: How does this compare to CDs or investments?
A: Savings accounts offer liquidity but lower returns than CDs (fixed terms) or investments (higher risk).