How it works

Banks quote savings rates as an APY (annual percentage yield), which already includes the effect of compounding. The calculator turns the APY into the equivalent monthly rate, grows your balance month by month, and adds your deposit at the end of each month.

Monthly rate = (1 + APY)^(1/12) − 1

Worked example

$10,000 at 4% APY for a year, with nothing added, earns exactly $400.00. That's what an APY means.

Add $200 a month for five years and you deposit $22,000 in total. At 4% APY it grows to $25,402, including $3,402 of interest. At 0.5% APY the same deposits earn just $401.

Things to know

Savings rates change. Unlike a CD, most savings accounts can change their APY at any time, often when the Federal Reserve moves interest rates.
Interest is taxable. In the U.S. savings interest counts as ordinary income. Banks send a Form 1099-INT once you earn $10 or more in a year.
Check the insurance. FDIC insurance covers deposits up to $250,000 per depositor, per insured bank, for each account ownership category. Credit unions have the equivalent through the NCUA.
APY vs APR. APR is the rate before compounding. For savings, compare accounts by APY.

Questions people ask

How much interest does $10,000 earn in a year?

At 4% APY, $400. At 0.5% APY, $50. Multiply the balance by the APY for a one-year estimate with no deposits.

Is interest paid monthly or daily?

Many banks calculate interest daily and pay it monthly. Because the APY already includes compounding, the frequency doesn't change the yearly result.

Where should an emergency fund go?

Somewhere insured and easy to reach, like a high-yield savings account. Our emergency fund calculator helps you size it.

Sources

Reviewed September 24, 2026 by The Dollars World team. How we build and check our calculators. This is general information, not financial advice.