High-yield savings calculator

See what a high-yield savings account actually earns — then watch the number shrink when the rate gets cut and the tax bill lands. Two things most savings calculators quietly leave out.

How the math works

The projection is the standard future-value formula. Your starting balance compounds on its own, and your monthly deposits form an ordinary annuity that compounds alongside it.

Here FV is the ending balance, PV the starting balance, PMT the monthly deposit, i the monthly rate (the APY divided by 12), and t the number of months. The calculator runs this month by month, which is what lets it do the part a fixed-rate calculator can't: change i partway through. A rate cut is just the same run in two segments — the old rate up to the cut, the new rate after.

The after-tax figure is simpler. Interest is taxed as ordinary income, so the amount you keep is the interest times one minus your marginal rate. A 4.00% APY at a 22% bracket keeps 3.12%.

One convention note: the calculator compounds the rate you enter monthly. A quoted APY already includes compounding, so entering an APY here treats it as very slightly more than it is — a few dollars over a year on $10,000. It changes no decision.

Worked example

Take a saver putting $10,000 into a high-yield account at 4.00% APY and adding $300 a month — the monthly amount in our starter-saver scenario. Over five years the balance reaches $32,100. Of that, $18,000 is money they put in and about $4,100 is interest.

Now hold everything the same and cut the rate. Say the APY drops a full point to 3.00% after the first year — the kind of move a Fed easing cycle produces. The ending balance falls to $31,146, and interest drops from about $4,100 to about $3,146. That one-point cut, arriving a year in, costs roughly $954 in interest over the five years. A calculator that locks a single rate never shows you that.

One more subtraction. Interest in a taxable savings account is ordinary income, taxed the year you earn it. At the 22% marginal bracket, the $4,100 of interest owes about $902 in federal tax, leaving $3,198. Put another way, a 4.00% APY nets 3.12% once the tax is out.

When this calculator is wrong

The calculator earns whatever rate you type. That's only worth anything if the rate is real.

The FDIC national average on savings deposits is 0.41% APY. Plenty of accounts labeled "high-yield" at large national banks pay something in that neighborhood, not the 4.00–4.50% the online banks pay. On $10,000, that gap runs about $360 a year — the difference between an account that keeps pace and one that does nothing. If you modeled 4.00% but your money sits in a 0.41% account, the projection above is off by roughly a factor of ten on the interest line. Move the money. The exception is if you genuinely need branch access or a checkbook, in which case the convenience may be worth the spread.

Other ways the number above can mislead:

• It assumes you never touch the balance. High-yield savings is liquid by design, which is the point of using it instead of a CD. Every withdrawal you make lowers the balance that's compounding, and the projection doesn't know about the withdrawals you haven't made yet.
• FDIC insurance stops at $250,000. That's the limit per depositor, per insured bank, per ownership category. Balance above that at a single bank isn't insured unless it's spread across banks or ownership categories.
• It doesn't adjust for inflation. At the post-WWII average of 3.3%, a 4.00% APY is barely positive in real terms, and a 0.41% account loses ground every year the money sits there.

What to do with the result

If your account already pays a real high-yield rate, the main lever left is the one the calculator can't pull for you: don't let the balance sit above what you actually need in cash. Savings is short-horizon money — an emergency fund, a down payment, a bill you know is coming in 18 months. Past about three years, the after-tax, after-inflation return on cash is close to zero, and the math points to an index fund instead.

If your account pays 0.41%, the single highest-value move available to a typical saver is switching to one that pays 4.00% or more. That isn't a rate optimisation. On $10,000 it's about $360 a year, for the effort of opening an account online.

Common questions

Is high-yield savings interest taxable?

Yes. It's ordinary income, reported to you on a 1099-INT, and taxed the year you earn it — not when you withdraw. At a 22% marginal bracket, a 4.00% APY nets 3.12%. The exception is interest earned inside a tax-advantaged account like a Roth IRA or HSA.

Can the bank change my APY?

Yes, at any time and without much notice. High-yield savings rates are variable and move with the Fed's target rate. That's exactly why this calculator lets you model a cut instead of assuming today's rate holds forever.

Is my money safe in a high-yield savings account?

At an FDIC-insured bank, deposits are covered up to $250,000 per depositor, per bank, per ownership category. Online-only banks carry the same FDIC insurance as banks with branches; the higher rate doesn't mean higher risk on insured balances.

High-yield savings or a 1-year CD — which earns more?

Usually the savings account today. The FDIC national average 12-month CD pays 1.79%; the best high-yield savings accounts pay 4.00% or more. A CD wins mainly when it's at a competitive online issuer and you're certain you won't touch the money before it matures.

How often does high-yield savings compound?

Most accounts compound daily and credit the interest monthly. This calculator compounds monthly; at these rates the gap between daily and monthly compounding is a few cents on the dollar over a year, small enough to ignore for planning.