How to use this interest calculator
- Enter your starting balance and monthly contribution. Either can be $0; add a once-a-year deposit (such as a tax refund) under “Annual deposits & timing.”
- Enter the interest rate and compounding. If your bank quotes an APY, keep compounding on “Annually”; otherwise pick the frequency your account uses.
- Set the time period in years and months.
- Add taxes and inflation under “Taxes & inflation” to see the interest you keep and what your balance will buy in today’s dollars. Copy the link to save or share your scenario.
Simple vs. compound interest formulas
Simple interest is paid only on the money you deposited. It is common on some bonds, notes and short-term loans, but savings accounts, CDs and money market accounts almost always compound.
I = P × r × t
- I
- interest earned
- P
- principal (the amount deposited)
- r
- annual interest rate as a decimal
- t
- time in years
Compound interest adds each period’s interest to the balance, so the next period’s interest is paid on a larger amount.
A = P(1 + r/n)^(n × t)
- A
- ending balance
- P
- principal
- r
- nominal annual rate as a decimal
- n
- compounding periods per year (1 = annually, 12 = monthly, 365 = daily)
- t
- time in years
Worked example: $10,000 for 5 years at 4%
- Simple: I = $10,000 × 0.04 × 5 = $2,000.00, for a balance of $12,000.00.
- Compounded annually: A = $10,000 × (1 + 0.04)5 = $10,000 × 1.216653 = $12,166.53, or $2,166.53 of interest.
- Compounded monthly: $12,209.97; daily: $12,213.89.
Compounding adds $166.53 over 5 years. The effect snowballs with time: after 30 years the same deposit would hold $22,000 with simple interest but $32,434 compounded annually.
Adding regular deposits
Each deposit compounds from the day it is made. For equal deposits at the end of each month, the deposits grow to:
F = D × ((1 + i)^N − 1) / i
- F
- future value of the deposits
- D
- monthly deposit
- i
- monthly rate: (1 + r/n)^(n/12) − 1
- N
- number of monthly deposits
In the calculator’s default example the rate is an APY compounded annually, so i = (1 + 0.04)1/12 − 1 = 0.0032737 and N = 60. The $250 deposits grow to $250 × 66.179 = $16,544.76, and the $10,000 starting balance grows to $12,166.53. Together that is $28,711.28: $25,000 you put in and $3,711.28 of interest ($2,166.53 earned by the starting balance and $1,544.76 by the deposits). Making deposits at the start of each month multiplies F by (1 + i).
How much interest does $10,000 earn?
Interest earned on a single $10,000 deposit at different APYs, before taxes, with interest left in the account:
| APY | 1 yr | 3 yrs | 5 yrs | 10 yrs | 20 yrs |
|---|---|---|---|---|---|
| 0.5% | $50 | $151 | $253 | $511 | $1,049 |
| 1% | $100 | $303 | $510 | $1,046 | $2,202 |
| 2% | $200 | $612 | $1,041 | $2,190 | $4,859 |
| 3% | $300 | $927 | $1,593 | $3,439 | $8,061 |
| 4% | $400 | $1,249 | $2,167 | $4,802 | $11,911 |
| 5% | $500 | $1,576 | $2,763 | $6,289 | $16,533 |
| 6% | $600 | $1,910 | $3,382 | $7,908 | $22,071 |
How taxes reduce savings growth
Interest from a regular savings account, CD or money market account is generally taxable income in the year it is credited or earned, even if you never withdraw it. Your bank sends Form 1099-INT when you earn $10 or more, and you must report interest even without the form. Because the tax is paid every year, it also shrinks the balance that future interest is earned on.
For the default example ($10,000 plus $250 a month for 5 years at 4% APY), here is what you keep at different tax rates on interest:
| Tax rate on interest | Interest kept | Tax paid | Ending balance | After-tax yield |
|---|---|---|---|---|
| 0% (tax-free account) | $3,711 | $0 | $28,711 | 4.00% |
| 12% | $3,233 | $441 | $28,233 | 3.51% |
| 22% | $2,841 | $801 | $27,841 | 3.11% |
| 32% | $2,456 | $1,156 | $27,456 | 2.70% |
The gap widens over time. Over 30 years the same deposits would earn $103,752 of interest tax-free but only $72,343 after a 22% tax, a difference of $31,408.
- Taxable accounts (savings, CDs, money market accounts, taxable brokerage): enter your federal marginal rate plus any state income tax rate.
- Tax-free accounts: qualified withdrawals from a Roth IRA are tax-free, so enter 0%.
- Tax-deferred accounts such as a traditional IRA or 401(k) are not taxed while the money grows; enter 0% here, then remember that withdrawals are taxed as income later.
- Treasury bills, notes and bonds: interest is subject to federal income tax but exempt from state and local income tax, so enter only your federal rate.
Real vs. nominal interest rates
The rate your bank pays is a nominal rate. The real rate subtracts inflation and tells you how much more your savings can actually buy. Consumer prices rose 3.4% in the 12 months through August 2026, according to the Bureau of Labor Statistics’ CPI-U, which the calculator uses as its default inflation rate.
1 + real rate = (1 + nominal rate) / (1 + inflation)
- r real
- real (inflation-adjusted) rate
- r nominal
- stated interest rate or APY
- π
- inflation rate
The familiar shortcut, real ≈ nominal − inflation, is the Fisher approximation. With 4% interest and 3.4% inflation the shortcut gives 0.6%, while the exact formula gives 1.04 ÷ 1.034 − 1 = 0.58%. The two are close at low rates and drift apart as rates rise. Taxes come first: after a 22% tax the 4% yield becomes 3.11%, and the exact real return falls to -0.28%, meaning the savings lose buying power.
In the default example, the $28,711 ending balance would buy about what $24,291 buys today if inflation stays at 3.4%. To explore price changes on their own, try the inflation calculator.
Current savings account interest rates
Rates vary widely between banks. The FDIC’s national average savings rate was 0.37% as of September 21, 2026; it is an average of rates paid by insured banks and credit unions, weighted by each institution’s share of deposits. Many online banks paid far more: around 4% APY was typical among the top high-yield savings accounts listed by Bankrate as of September 28, 2026. Here is what that difference means for $10,000:
| Account | APY | Interest in 1 year | Interest in 5 years |
|---|---|---|---|
| National average savings (FDIC, September 21, 2026) | 0.37% | $37.00 | $186.37 |
| Top high-yield savings (typical, September 28, 2026) | 4% | $400.00 | $2,166.53 |
Savings rates are variable and can change at any time, often following the Federal Reserve’s policy rate. Before moving money, confirm that the bank is FDIC-insured (or the credit union is NCUA-insured): FDIC insurance covers $250,000 per depositor, per insured bank, for each account ownership category. For money you will not need for a set period, compare CD rates, and for longer-term goals see the compound interest calculator and the investment calculator.
Ways to earn more interest on savings
- Compare APYs, not just rates. APY includes compounding, so it is the fair way to compare accounts.
- Deposit early and automatically. Start-of-month deposits earn an extra month of interest, and automatic transfers keep contributions steady.
- Use tax-advantaged accounts for long-term savings so interest is not taxed every year.
- Watch for teaser rates and fees. A monthly fee or a promotional rate that drops can wipe out the advantage of a higher APY.
- Check the real return. If your after-tax rate is below inflation, your savings are losing buying power even as the balance grows.
Paying interest instead of earning it? Use the interest rate calculator to find the rate on a loan.
Frequently asked questions
How do you calculate interest on savings?
Multiply the balance by the periodic rate each compounding period and add the result to the balance. For a single deposit that is A = P × (1 + r/n)^(n × t). For example, $10,000 at 4% compounded annually for 5 years grows to $12,166.53, so it earns $2,166.53 of interest. Regular deposits each grow the same way from the date they are made.
What is the difference between simple and compound interest?
Simple interest is paid only on the original deposit (I = P × r × t); compound interest is also paid on interest already earned. At 4%, $10,000 earns $2,000 of simple interest in 5 years but $2,167 compounded annually. Over 30 years the gap grows to $10,434.
How much interest will $10,000 earn in a year?
It depends on the rate: at 1% APY $10,000 earns $100 in a year, at 3% it earns $300, and at 4% it earns $400. At the 0.37% national average savings rate reported by the FDIC, it would earn only $37.00. Interest is taxable unless the money is in a tax-advantaged account.
Is interest on a savings account taxable?
Yes. The IRS treats interest credited to a savings or money market account as taxable income in the year it becomes available to you, whether or not you withdraw it; CD interest is generally taxed year by year as well. Banks send Form 1099-INT when you earn $10 or more, but you must report all interest even without a form. Interest on U.S. Treasury securities is exempt from state and local income tax.
What is a real interest rate?
A real interest rate is your nominal rate adjusted for inflation, so it measures the growth in what your money can buy. The exact formula is (1 + nominal) ÷ (1 + inflation) − 1; the shortcut is nominal minus inflation. With 4% interest and 3.4% inflation, the real rate is 0.58% exactly versus 0.6% by the shortcut.
Does it matter if I deposit at the start or end of the month?
Yes, a little. A deposit made at the start of a month earns one extra month of interest compared with one made at the end. In the default example, switching to start-of-month deposits raises the ending balance from $28,711 to $28,765. The difference grows with higher rates and longer time periods.
Is my savings account interest rate an APR or an APY?
Banks advertise deposit accounts with an APY (annual percentage yield), which already includes the effect of compounding over a year. If you enter an APY in this calculator, keep compounding set to “Annually” so compounding is not counted twice. If you only know the nominal rate and how often it compounds, enter that rate and choose the matching frequency.