High-Yield Savings Account Calculator
High-yield savings accounts (HYSAs) offered by online banks and credit unions typically pay annual percentage yields (APYs) significantly higher than the national average for traditional savings accounts, making them an attractive option for emergency funds, short-term savings goals, and cash holdings awaiting investment. The yield on a HYSA is expressed as an APY, which reflects the effect of compounding over a full year. Most HYSAs compound interest daily, meaning interest is calculated on the current balance each day and added to the account, so that prior interest itself earns interest going forward. The APY and the simple annual percentage rate (APR) differ: APY accounts for compounding while APR does not, so APY is always equal to or greater than APR. Interest earned in a HYSA is taxable as ordinary income in the year it is credited, reported on Form 1099-INT. Balances at banks are insured by the FDIC up to $250,000 per depositor, per institution, per ownership category; balances at credit unions are insured by the NCUA under the same limits. This calculator shows the ending balance of a high-yield savings account after daily compounding over your chosen term, starting from an initial deposit with optional monthly additions, and estimates the annual federal tax on interest earned at your marginal rate.
Starting with $10,000, adding $500 per month at 4.75% APY for 3 years yields -- before taxes.
How compound interest grows your savings
High-yield savings accounts compound interest daily, meaning interest is calculated and added to your balance each day. The next day's interest is calculated on the larger balance, earning interest on interest. Over months and years, this compounding effect significantly accelerates growth compared to simple interest.
Daily rate = APY / 365
Months = years x 12
Days = months x 30.44 (average)
FV of initial = deposit x (1 + daily rate)^days
FV of contributions = monthly x (((1 + daily rate)^days - 1) / daily rate)
Total FV = FV of initial + FV of contributions
Interest = Total FV - deposit - (monthly x months)
After-tax interest = interest x (1 - tax rate)
After-tax balance = Total FV - (interest x tax rate)
Worked example
Initial deposit $10,000, monthly contribution $500, 4.75% APY, 3 years, 22% tax rate:
- Daily rate: 4.75% / 365 = 0.0130%
- Total months: 3 x 12 = 36 months
- FV of $10,000: $10,000 x (1.000130)^1095 = $11,512.09
- FV of $500/month: $500 x (((1.000130)^1095 - 1) / 0.000130) = $18,867.41
- Total FV: $11,512.09 + $18,867.41 = $30,379.50
- Interest earned: $30,379.50 - $10,000 - $18,000 = $2,379.50
- Tax on interest: $2,379.50 x 0.22 = $523.49
- After-tax balance: $30,379.50 - $523.49 = $29,856.01
FDIC insurance and account safety
All deposits in a FDIC-insured bank are protected up to $250,000 per depositor, per bank, per ownership category. High-yield savings accounts at online banks are FDIC-insured if the bank is a member of the FDIC. Check your bank's website or the FDIC BankFind database to verify membership.
If your balance exceeds $250,000 at a single bank, the excess is not insured. To protect larger amounts, spread deposits across multiple FDIC-insured banks or use different ownership categories (individual, joint, retirement). This calculator alerts you if your projected balance exceeds the insurance limit.
High-yield savings accounts are appropriate for emergency funds (3-6 months of expenses) and short-term savings goals (less than five years). For longer-term goals, consider investing in diversified index funds, which historically earn higher returns but with market risk.
Rate comparison: same deposit at different APYs
| APY | Final Balance | Interest (pre-tax) |
|---|
High-yield savings: frequently asked questions
What is APY and how is it different from APR?
APY (annual percentage yield) is the effective annual return including the effect of compounding. APR (annual percentage rate) is the base interest rate without compounding. A high-yield savings account advertises APY, which accounts for daily compounding. For example, a 4.75% APY earns slightly more than 4.75% / 365 per day because the interest compounds. The calculator uses APY to compute the final balance, as that is the rate displayed by banks.
How is interest compounded in a savings account?
Most high-yield savings accounts compound interest daily. This means each day, the bank calculates interest on your current balance (principal plus accumulated interest) and adds it to your account. Compounding daily earns more interest than monthly or annual compounding because interest earns interest more frequently. The effect compounds over months and years, especially for larger balances.
What is the FDIC insurance limit for savings accounts?
The FDIC insures deposits up to $250,000 per depositor, per insured bank, per ownership category. If you have multiple accounts at the same bank in different ownership categories (e.g., individual account, joint account, retirement account), each is insured separately up to $250,000. If your balance exceeds $250,000 at one bank, the excess is not insured. Spread deposits across multiple banks or ownership categories to maintain full coverage.
How does monthly contribution affect final balance?
Adding regular contributions accelerates growth through two effects: the contribution itself and compounding interest on both existing and new balances. The calculator uses the future value of an annuity formula with daily compounding. A $500 monthly contribution over three years at 4.75% APY adds $18,000 in contributions and roughly $1,080 in interest, for a total of about $19,080.
Should I pay taxes on interest earned in a savings account?
Yes, interest earned in a savings account is taxable ordinary income in the year earned. You will receive a 1099-INT form from the bank if interest exceeds $10. The tax liability depends on your marginal tax rate. This calculator shows after-tax interest when you enter your tax rate, allowing you to see the net benefit after taxes.
How do high-yield savings accounts compare to CDs and money market accounts?
High-yield savings accounts offer full liquidity: you can withdraw any amount at any time without penalty. Certificates of Deposit (CDs) lock funds for a fixed term and charge penalties for early withdrawal. Money market accounts typically pay slightly less than high-yield savings but offer check-writing features. For near-term goals and emergency funds, high-yield savings are preferable due to liquidity. CDs offer higher rates for longer commitments.
Official sources
- FDIC deposit insurance rules: FDIC Deposit Insurance.
- FDIC BankFind: Find FDIC-insured institutions.
- Consumer savings guidance: CFPB Savings Tools.
Reviewed by the CalculatorHub team, edited by James Graham, 13 June 2026. See our methodology. General information, not financial advice.