Savings Interest Calculator
Calculate what a high-yield savings account or CD actually pays, including the difference between APR and APY.
Your details
Details
Savings interest is taxed as ordinary income
This calculator runs entirely on your device. Nothing you enter is uploaded, stored, or sold. How this works
Balance after 24 months
$21,771.07
$1,771.07 of interest at 4.33% APY
Includes your inputs, the full breakdown, and every row of the table.
APY
4.33%
From 4.25% APR
Interest earned
$1,771.07
After tax
$1,346.01
At a 24% marginal rate
Total deposited
$20,000
- Opening deposit
- $20,000
- Total deposited
- $20,000
- Interest earned
- $1,771.07
- Tax on interest
- - $425.06
- Interest kept
- $1,346.01
- Final balance
- $21,771.07
| Month | Interest | Cumulative | Balance |
|---|---|---|---|
| 12 | $73.64 | $866.75 | $20,866.75 |
| 24 | $76.83 | $1,771.07 | $21,771.07 |
What this means
- APY already includes the effect of compounding, which is why it is the only fair way to compare two savings accounts.
- Interest from savings accounts and CDs is taxed as ordinary income in the year you earn it, even if you leave it in the account.
- CDs usually charge an early-withdrawal penalty of several months of interest. Do not lock up money you might need.
How the savings interest calculation works
Banks advertise whichever number sounds better. APR is the simple annual rate; APY folds in compounding and is always the higher of the two. Comparing one bank's APR against another's APY is how people talk themselves into the worse account.
The gap between a big-bank savings account paying almost nothing and a competitive high-yield account is one of the easiest wins in personal finance. On a $20,000 balance the difference is often several hundred dollars a year for an afternoon of paperwork.
Do not forget the tax line. Savings interest is taxed as ordinary income, so a headline 4.25% is closer to 3.2% in the hand for someone in the 24% bracket — which matters when you are comparing it against paying down a loan.
Frequently asked questions
What is the difference between APR and APY?
APR is the nominal annual rate before compounding. APY is what you actually earn once interest starts earning interest. At 4.25% compounded monthly, the APY is about 4.33%.
Is a CD better than a savings account?
A CD usually pays slightly more in exchange for locking your money up for a fixed term. If rates are falling, locking in is attractive; if you might need the cash, the early-withdrawal penalty usually erases the advantage.
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Disclaimer. This calculator is provided for general information and educational purposes only and does not constitute financial, tax, legal, medical, or engineering advice. Results are estimates based on the inputs you provide and the assumptions described above. Confirm any figure with a qualified professional before acting on it.