Interest Calculator - NerdWallet (2024)

Interest Calculator

Use this free interest calculator to tally how much interest your account can earn.

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Use the interest calculator below to calculate how much interest your savings account can earn. The higher your interest rate, or yield, the more your bank balance grows.

You can enter a beginning balance and see how much interest you’ll earn over time, with or without contributions. You can also start with a $0 beginning balance and see how fast you can build your savings with monthly or quarterly contributions.

» Learn how your money works for you by reading this explainer on interest

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Interest calculator: How to fill out the fields

  • Starting balance: This is the amount you plan to deposit in the savings account initially.

  • Contribution amount: This is the amount you will deposit on an ongoing basis, whether monthly or annually.

  • Time to grow: This is the number of years your money will be in savings without a withdrawal.

  • Annual interest rate: This is the rate you expect to earn each year. The average national savings rate is 0.45%.

  • Compound frequency: This is how often interest is added to the account. Note that the total yield considers both interest rate and compound frequency.

» Want to upgrade your account? Check out NerdWallet's picks for the best high-yield online savings accounts

What is interest?

Interest is the amount of money you can earn from an account. With savings accounts, interest is the money added to an account. It is money you earn, not money you pay. You earn interest from a savings account because your bank is paying you to lend it money. Your funds get used in the bank’s loans to other customers. Credit unions have a similar process, but they call interest “dividends.”

What is an interest calculator?

An interest calculator computes how much interest you can earn over time in a savings account. This calculator will show you total balances (your starting balance, plus anything you contribute after plus the amount of interest earned) with different interest rates, time periods and compounding intervals.

How do you calculate interest?

You can calculate simple interest by multiplying the account balance by the interest rate, and multiplying that by the number of time periods. For this calculator, enter a time period of one year and set the compounding frequency to “annual” to compute simple interest.

To calculate compound interest, you’ll need to add up interest earned over each compounding period (daily, monthly or annually). With this calculator, you can do that by adjusting the compound frequency and number of years.

» Dig deeper. Learn more about compound interest

How much should I save each month?

A good target is any amount that you can save consistently. There is no perfect answer for how much you should have in savings, but an ideal target for an emergency fund is enough to cover three to six months' worth of basic expenses. If you’re able to save 20% of your take-home pay each month and grow it in a high yield savings account, you are likely in a good position to reach your goals. But it’s more important to be consistent, even if it means having a smaller savings target each month.

How can I save $1,000?

If you start with zero and put away $85 a month (a little less than $22 a week) in a high-yield savings account that compounds monthly and earns a 5% annual interest rate, you would save $1,043.70 after one year. Use this interest calculator to compare other contribution amounts and yields.

How much interest can you earn on $1 million dollars?

If you have $1 million in an account that earns 5% interest compounded monthly, you would earn $51,161.90 after one year. But keep in mind that balances above $250,000 may not be federally insured. Amounts above the insurance limit may not be covered in the event of a bank failure.

» Learn more about your options if you’re banking more than $250,000

How much will a savings account earn in interest?

The answer depends on the interest rate, deposits and the amount of time given to earn interest. The higher the rate, the faster your balance can grow. Also, because of compounding, the more often interest is deposited into a savings account, the more the overall balance will grow. An account that compounds daily can grow more than one that compounds less frequently, such as once a month. To increase your bank balance faster, put your money in an account with a high yield that compounds frequently.

Interest Calculator - NerdWallet (2024)
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