Before you open a savings account, money market account or certificate of deposit (CD), you'll want to compare several options and get an idea of how much interest you can earn. This savings calculator can help you crunch the numbers and figure out how much interest you can earn. Simply input how much you can save and the details of the account, including your interest yield.
†The information provided is for educational purposes only and should not be construed as financial advice. Experian cannot guarantee the accuracy of the results provided. Your lender may charge other fees which have not been factored in this calculation. These results, based on the information provided by you, represent an estimate and you should consult your own financial advisor regarding your particular needs.
How to Use This Calculator
This savings calculator estimates how much total interest you'll earn in different types of savings accounts. To use it, you'll need the following information:
- Initial deposit: The amount you plan to deposit into the account after you open it.
- Monthly contribution: The amount you expect to contribute to the account each month after your initial deposit. If you expect this amount to fluctuate each month, you can estimate an average monthly contribution over the course of a year.
- APY: The annual percentage yield (APY) for the account you're thinking about opening. This is usually the advertised rate on the account—not the interest rate—and incorporates compounding interest. Keep in mind that savings and money market account APYs are variable, so they can fluctuate over time. CD rates are generally fixed for the account's term.
- Compound frequency: This refers to how often the financial institution compounds interest. While many accounts compound daily, others may do so monthly, quarterly, semiannually or even annually. Financial institutions may disclose this information on their websites, but some may require you to check the deposit agreement or open an account to get it.
- Investment period (years): This reflects the amount of time you plan to hold the money in the account. If you have a specific goal, such as a down payment for a house, choose an investment period based on your purchase timeline. If you're planning to save with a CD, use the account’s term length. If there's no specific goal—for example, you're building an emergency fund—choose whatever period you need to get an idea of how much you can earn.
Once you've entered all of the inputs for the calculator, you'll get the following results:
- Total earnings: This is your total estimated interest earnings on the account. Remember, though, that if you're using a savings or money market account, the interest rate will be variable. If the rate goes up or down, so will the total amount of interest you'll earn.
- Interest schedule: You'll be able to see your total contributions, interest earned and total savings balance for each individual year.
Let's say you open a savings account with an initial deposit of $10,000, after which you'll contribute $200 each month. The account has an APY of 5%, and the bank compounds your interest monthly. If you hold the money in the account for five years—for the sake of simplicity, we're assuming the rate remains constant during that time—here are your results:
- Total contributions: $22,000
- Total earnings: $4,434.80
- Ending balance: $26,434.80
Here's how the interest schedule breaks down:
|Year||Total Savings||Contributions||Interest Earned|
How to Choose the Best Savings Account
While it's tempting to simply open a savings account with the same bank or credit union that administers your checking account, you may be leaving money on the table by doing so.
Many traditional banks offer traditional savings accounts, which offer extremely low APYs—some go as low as 0.01%. While they're still a good place to keep your funds safe, you won't earn much interest.
With online banks and some traditional banks and credit unions, you may be able to get a high-yield savings account, which offers a much higher APY than the national average. In 2023, some high-yield savings accounts, money market accounts and CDs offer APYs upwards of 5%.
As you consider your options, here are some factors to consider:
- The type of savings account: If you need a place to keep your emergency savings or you want easy access to your funds, you may consider a high-yield savings account or a money market account. If you want to earn a higher yield and can lock in your funds for a set period of time, you may consider a CD instead.
- How key features compare: In addition to the APY, you'll also want to consider minimum balance requirements, fees, options for accessing your funds and other special features. For example, some banks allow you to open multiple savings accounts for different goals.
- Other financial products and services: If you want your checking and savings accounts in the same place, you might prefer to do business with a bank that offers other savings products. Before opening an account, check to see what other financial products and services the financial institution offers, such as loans, credit cards and investment services, in case you want to keep all of your money management under one roof.
How to Open a Savings Account
Once you've chosen the right savings account for you, you can typically open an account online or in person if the bank or credit union has physical branches.
To open a savings account, you'll typically need to provide some basic information about yourself, including your:
- Date of birth
- Social Security number
- Contact information
You'll also need to provide a copy of your government-issued photo ID. After you submit your application, you'll typically get a response within seconds. Once the account is open, you can make the initial deposit. If you're opening the account in person, you can do this with a check or cash. If you're opening the account online, you'll typically set up a transfer from another bank account, send a wire transfer or make a mobile check deposit.
How Often Do Savings Account Interest Rates Change?
Savings and money market account interest rates are variable and can change at any time. For the most part, deposit account interest rates are directly influenced by the federal funds rate, which is the rate that banks use when lending to one another. The Federal Reserve Open Market Committee (FOMC) adjusts the fed funds rate as necessary to manage inflation in the U.S. economy.
When the FOMC increases the fed rate, banks and credit unions increase both their savings account interest rates and loan interest rates, making it more expensive to borrow money and more appealing to save it. This, in turn, tends to reduce consumer spending, which can slow the rate of inflation.
As the inflation rate decreases, the Fed typically lowers its rate, which makes it more affordable to borrow money and less attractive to save it. This, in turn, helps increase consumer spending, which contributes to a healthy economy.
Shop Around for the Best Savings Rates
Take your time to research and compare the best high-yield savings account rates to maximize your interest earnings.
Keep in mind, though, that because interest rates can fluctuate over time, the account that offers the best rate now may not retain the crown in the future. So, make sure to evaluate all the details of each account you're considering to get the best overall fit.