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. It runs the same numbers at the rate your savings earn now, so you see what moving the money is worth.
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 the national average savings rate of 0.37%, the same deposits earn $296, so moving the money is worth $3,106. Left in an interest checking account at the 0.07% average, it would earn $56.
High-yield savings vs your account now
The FDIC publishes a national average rate each month, weighted by how much each bank and credit union holds in deposits. On September 21, 2026 it was 0.37% for savings, 0.07% for interest checking and 0.63% for money market accounts. Because the biggest banks hold the most deposits and pay the least, the average sits far below what many online banks and credit unions offer on high-yield savings.
A high-yield savings account is an ordinary savings account that pays a higher rate. It's usually at an online bank, which saves on branches. The money is just as insured, and you can still move it back to checking, though transfers between banks can take a business day or more.
Before you switch
- Check the insurance. FDIC insurance covers deposits up to $250,000 per depositor, per insured bank, for each account ownership category, and credit unions have the equivalent through the NCUA. Look the bank up on FDIC BankFind. If you sign up through an app that isn't itself a bank, find out which bank holds your money: deposit insurance pays only if an insured bank fails.
- Savings rates change. Unlike a CD, most savings accounts can change their APY at any time, often when the Federal Reserve moves interest rates.
- Read the conditions. Some rates apply only above a minimum balance, only to new customers for a few months, or only with a monthly deposit.
- Withdrawal limits. The Federal Reserve dropped the federal limit of six convenient withdrawals a month in April 2020, but some banks still set their own limit or charge for extra withdrawals.
- 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.
- APY vs APR. APR is the rate before compounding. For savings, compare accounts by APY.
Money you won't need for a year or more could earn a fixed rate instead: see the CD calculator. The FDIC's national average for a 12-month CD was 1.73%.
Questions people ask
How much interest does $10,000 earn in a year?
At 4% APY, $400. At the national average savings rate of 0.37%, $37. Multiply the balance by the APY for a one-year estimate with no deposits.
What is the average savings account interest rate?
0.37% APY, according to the FDIC's national rate for September 2026. It's an average across all insured banks and credit unions, weighted by deposits, so large banks paying very little pull it down. High-yield accounts pay well above it.
Is a high-yield savings account safe?
At an FDIC-insured bank or NCUA-insured credit union, yes: deposits are insured up to $250,000 per depositor, per institution, for each ownership category. The higher rate doesn't mean higher risk. Check the institution is insured before you open the account.
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
- FDIC: National Rates and Rate Caps (September 2026)
- FDIC: understanding deposit insurance
- FDIC BankFind: check that a bank is insured
- CFPB, Regulation DD (Truth in Savings), Appendix A: annual percentage yield calculation
- Federal Reserve: Regulation D six-per-month transfer limit removed (April 2020)
- IRS: Topic 403, interest received
Reviewed September 29, 2026 by The Dollars World team. How we build and check our calculators · Our data and formulas. This is general information, not financial advice.