Savings calculator & compound interest tool

Compound interest puts your Canadian dollars to work while you sleep. Over time, your initial deposit can snowball into much more than you realize. Wondering how your savings could grow? Calculate your savings growth using our comprehensive savings calculators.

You can choose from a quick-view savings calculator that pulls interest rates from various Canadian banks or fintechs, or you can use our more advanced compound interest calculator to see how other factors like inflation and taxes can impact your overall savings growth.

→ Jump to the Advanced compound interest calculator below

Savings calculator

This comprehensive savings calculator is your ultimate tool for calculating savings growth. You can not only see what your savings could be based on a rate you enter manually, but also based on real, current savings interest rates from savings accounts offered by banks and other financial institutions across Canada.

How to use this savings calculator & comparison tool

1. Set your parameters: Adjust the sliders or type directly into the input fields to set your starting balance, monthly contribution goal and how many years you plan to save.
2. Choose your comparison method: This savings calculator offers three ways to calculate your savings goals:
   • Option 1 (manual interest rate): Enter a custom interest rate to see exactly how a specific percentage will impact your savings.
   • Option 2 (quick pick): Select a popular Canadian savings account to see how much you could potentially save with that account’s real-time interest rate.
   • Option 3 (side-by-side comparison): Select two different banks or other financial institutions from the lists, and then select one of their savings accounts from the dropdown list of options, so you can see a side-by-side comparison of how your savings could grow in one account versus another.
3. Calculate growth: Click the “Calculate savings” button to generate your personalized results.
4. Review the results: Review the calculated earned interest, along with other account features, alongside a visual growth chart to see how much your calculated savings could grow over time.

How do factors like inflation and taxes impact savings growth?

Unfortunately, saving for the future is not as straightforward as it may seem. Due to inflation, one dollar now will have less purchasing power in the future than it does now. And unless you’re saving in a tax-exempt account, like a TFSA, you’ll also have to pay taxes on your savings growth.

That means the total savings you can actually use will look different from what a straightforward calculation may make it appear.

To give you an idea of what a more realistic view of your savings will be by taking into account factors like inflation and tax obligations, you can use the calculator below to get a more realistic picture of your potential savings.

How to use this advanced compound interest calculator

1. Enter your core savings data: Enter your starting balance, ongoing contribution amount, contribution frequency (e.g., monthly, bi-weekly, or annually) and the number of years you plan to save.
2. Enter the interest rate: Enter your expected annual interest rate and select how often interest is compounded (daily compounding is standard for most Canadian savings accounts).
3. Adjust for the real-world factors (taxes and inflation):
   • Tax impact: Enter your estimated marginal tax rate to see your “after-tax” earnings. See our guide to taxes on savings accounts to learn more.
   • Inflation adjustment: Enter an expected inflation rate to calculate the “real value” future purchasing power of your savings.
4. Generate your projection: Click the “Calculate compound interest” button to process your data using our advanced compounding engine.
5. Analyze your results:
   • The bottom line: Review your total final balance and the total interest earned over your selected term.
   • Purchasing Power: Check the “Purchasing Power” result to understand what your future savings will be worth in today’s dollars after accounting for inflation.
   • Visual Growth: Use the interactive chart to see the trajectory of your principal versus your interest growth year-over-year.

How to calculate compound interest

The formula to calculate compound interest is:

• A – the future value of your money, including earned interest
• P — the initial deposit amount or principal investment
• r — the annual interest rate (as a decimal)
• n — how often interest compounds each year
• t — the number of years the money is invested

For most savings accounts, your interest is compounded daily, or approximately 365 times per year. For long-term savings products like Guaranteed Investment Certificates (GICs), the formula or compounding period might differ.

How to calculate compound interest on bank savings accounts

The compound interest formula is much simpler if you know your bank savings account balance at the end of the business day. Here’s how most banks calculate compound interest on savings account balances:

With most bank savings accounts, interest begins accumulating when you make a deposit and is calculated on your daily closing balance. Typically, your account will be credited at the end of the month (12 times per year). Earnings can be used or spent the same day.

If you close your account, any accumulated interest is deposited the day it’s closed.

Compound interest formula example

Say you deposit $5,000 into a savings account that pays 1.5% interest. For simplicity, we’ll assume there are no bank fees, and you don’t make any subsequent deposits or withdrawals.

If interest compounds daily, or 365 times per year, here’s what you’d earn over five years:

If interest compounds monthly, or 12 times per year, here’s what you’d earn over five years:

If interest compounds quarterly, or four times per year, here’s what you’d earn over five years:

If interest compounds annually, or once per year, here’s what you’d earn over five years:

Compound interest vs simple interest

Often used to bank savings calculations, compound interest is paid on your initial deposit plus any interest earned. The amount you invest in a savings account earns interest, which is rolled into the total investment. The total investment continues earning interest—only this time, on a bigger balance than before.

Often used for loans, simple interest is only calculated on the original loan amount (the principle). Interest is not part of the calculation.

Compound interest formula FAQs

• How much interest will I earn on $500,000 in a year?

  In Canada, you might earn anywhere from 0.5% to 4% interest on a savings account (sometimes more with a new bank account promotion). So, if you deposit $500,000, you could earn around $2,500–$20,400 in one year. However, this doesn't factor in bank fees, any additional deposits or withdrawals you make or any taxes charged on your interest earnings.

• What is 5% interest on $1,000?

  To calculate 5% simple interest on $1,000, multiply 0.05 by 1,000. The answer is $50. To calculate 5% compound interest on $1,000, you need to know how often interest compounds on your money. For example, if interest compounds daily, 5% interest on $1,000 is $51.27. But if interest compounds monthly, 5% interest on $1,000 is $51.16.

• Do all savings accounts pay compound interest?

  Most savings accounts in Canada pay compound interest, but not all do. Speak with a representative from your bank or read the terms and conditions of your account to find out what types of interest is paid on your balance.

Written by

Stacie Hurst

Editor

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Stacie Hurst is an editor at Finder, specializing in loans, banking, investing and money transfers. She has a Bachelor of Arts in Psychology and Writing, and she has completed FP Canada Institute's Financial Management Course. Before working in the publishing industry, Stacie completed one year of law school in the United States. When not working, she can usually be found watching K-dramas or playing games with her friends and family. See full bio

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Stacie has written 233 Finder guides across topics including:

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Co-written by

Peter Carleton

Writer

Peter Carleton is a freelance writer that covers banking and investing, breaking down what you need to know about where you put your money. When Peter's not thinking about cutting-edge banking apps and robo-advisors, he runs a creative agency and spends his spare time cooking or reading. See full bio