How to use this calculator
Enter your initial deposit amount and any monthly contributions you plan to make. Set the annual interest rate (APY) your bank offers and choose how often interest compounds. Then enter your time horizon in years and months.
The calculator shows your total ending balance, how much of that is interest versus contributions, and a year by year table showing growth over time. The visual bar shows what percentage of your final balance came from interest versus your own deposits.
Understanding compound interest
Compound interest means you earn interest on your interest. When your bank pays interest and adds it to your balance, the next interest payment is calculated on the larger amount. Over time, this creates exponential growth.
The three factors that most influence your savings growth are: the interest rate, the amount of time, and consistent contributions. Even modest monthly additions compound significantly over 5 to 10 years.
Frequently asked questions
How much interest will I earn?
It depends on your balance, interest rate, time, and compounding frequency. Use the calculator above to see your specific scenario. As a rough guide, $10,000 at 5% APY earns about $500 in the first year.
What is APY?
APY stands for Annual Percentage Yield. It represents the total interest you earn in one year including the effect of compounding. It is the number you should compare when shopping for savings accounts.
Should I choose daily or monthly compounding?
For the same APY, the difference is negligible. Banks that advertise daily compounding may use a slightly lower daily rate. Focus on the APY number, which already accounts for compounding frequency.
Is savings account interest taxable?
Yes. Interest earned on savings accounts is taxed as ordinary income. Your bank will send a 1099 INT form if you earn $10 or more in interest during the year. This calculator shows pre tax returns.
How often should I contribute?
Monthly contributions work well for most people because they align with pay schedules. The most important thing is consistency. Automating your transfers removes the temptation to skip months.