High-Yield Savings Interest Calculator

Many people keep their emergency fund in a bank savings account earning almost nothing. Moving it to a high-yield savings account can earn hundreds or thousands of dollars more a year, with the same safety. This calculator shows exactly how much.

What this calculator does

Enter your starting balance, monthly deposit, the high-yield APY, your current bank's APY, the number of months and your tax rate on interest. It shows:

• the interest earned in the high-yield account,
• your ending balance,
• the interest after tax, and
• the extra earned compared with your current bank.

The formula in plain English

Monthly rate = (1 + APY) raised to the 1/12 power − 1. This converts the yearly APY into an equivalent monthly rate.

Each month, interest is earned on the balance, then your deposit is added.

Interest earned = total interest over the period.

After-tax interest = interest × (1 − your tax rate).

Extra earned = high-yield interest − interest at your current bank's APY.

A worked example

Sam has $20,000 in a bank savings account earning 0.4% and adds $500 a month. A high-yield account pays 3.75%. Sam's combined tax rate is 30%.

• Interest in 12 months in the high-yield account: about $852.
• Ending balance: about $26,850.
• After tax: about $597.
• Extra earned compared with the bank account: about $761.

That's real money for doing nothing more than moving an account, and the gap grows as the balance grows.

Why it matters at each career stage

If you're: Student

Even a small emergency fund earns more in a high-yield account. Keep the money separate from your checking so it's there when you need it.

If you're: Resident / fellow

Build your emergency fund in a high-yield account. With unpredictable schedules and moving between programs, having cash available matters more than investment returns.

If you're: Employed

Larger emergency funds and money saved for a home down payment or taxes can earn a meaningful amount in high-yield savings. Keep long-term money invested instead.

Choosing an account

Look at the APY. Compare several banks and credit unions.

Check insurance. Make sure the bank is FDIC-insured or the credit union NCUA-insured.

Watch for fees and minimums. Many high-yield accounts have no fees or minimum balance.

Check transfer speed. Transfers to checking usually take one to three business days, which is fine for most emergencies.

Use buckets. Many banks let you label sub-accounts for an emergency fund, travel or taxes.

High-yield savings vs other options

Money market accounts and money market funds pay similar rates and may offer check-writing.

CDs and Treasury bills can lock in a rate for a set time, but your money is less flexible.

Investing in stocks has higher expected returns over long periods but can lose value in the short term, so it's better for money you won't need for years.

How much to keep in savings

A common target is three to six months of essential expenses in an emergency fund, plus separate savings for planned costs like car repairs, holidays and insurance premiums. People with variable income, such as per-diem or 1099 workers, or a single income supporting a family, often keep more. Money beyond that is usually better invested for long-term goals, where expected returns are higher. Review the split once a year as your expenses and income change.

Rates change

High-yield rates rise and fall with interest rates set by the Federal Reserve. Recheck your rate a couple of times a year, and don't be afraid to move to a better account.

Next, size your emergency fund, plan sinking funds and see how compound interest works over the long term.