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Plan out your goals with our savings calculator
See how long it will take you to reach your savings goal.
If you’re saving for a specific goal, like a down payment for a house or the price of a round-the-world vacation, calculate how much you need to set aside each month to reach your goal. By entering a few details into a savings calculator, you can easily figure out how much you can save for up to 40 years.
Calculate with current savings rates
How do interest rates on savings accounts work?
Unlike many checking accounts, savings accounts earn you interest without you having to do a thing.
Interest is calculated as a percentage of your total deposit balance, such as 2.5% or 3% APY (annual percentage yield). Most savings accounts feature a variable interest rate, which means your bank may raise or lower the rate in line with fluctuations in the economy.
Your bank may calculate interest daily, and credit your account monthly or quarterly.
Savings accounts also offer the increased earning power of compound interest. This is when you earn interest on your initial deposit amount as well as the interest you have already accumulated — earning interest on your interest.
How do high-interest savings accounts work?
High-interest savings accounts offer more interest than ordinary savings accounts. However, to earn the maximum interest rates, you may have to satisfy a minimum balance, initial deposit or make regular automatic deposits.
Examples of high-interest savings accounts include:
- Online savings accounts. These accounts usually offer easy access for deposits and withdrawals and have some of the most competitive interest rates, but you can only manage your funds via Internet and mobile banking.
- Savings accounts with bonuses or rewards. Some savings accounts offer signup bonuses such as cash rewards. While tempting, be sure that this account is good for you long term — a signup bonus usually isn’t enough to make up for a low interest rate.
- Traditional high-interest savings accounts. Brick-and-mortar banks offer various savings account options. High-interest accounts usually come with conditions, such as a minimum opening amount or a minimum balance. If you meet all of the conditions, these accounts can be competitive, though check the fees.
Why do I need to find the best interest rate?
Generally, the higher the interest rate, the greater the earning power. Even a small difference in interest rates can have a substantial effect on your overall savings, so compare a range of savings accounts and shop around for the best possible rate.
Mark calculates the best interest rate
As an example, let’s consider the case of Mark, a 25-year-old customer service consultant from Ohio. Having spent money as fast as he earned it throughout his 20s, Mark is ready to start putting some money aside monthly to save for a down payment on a house. He has $1,000 to save and plans to deposit an extra $100 each week, so Mark decides to calculate the difference between two savings accounts — one that pays 2.5% and another that pays 3%.
|Account A||Account B|
|Interest rate||2.5% APY||3% APY|
|Ongoing weekly deposit||$100||$100|
|Amount saved after 1 year||$6,289.57||$6,307.69|
|Amount saved after 3 years||$17,273.73||$17,412.77|
|Amount saved after 5 years||$28,820.91||$29,204.34|
As you can see, by choosing the account with a 0.5% higher interest rate, at the end of five years Mark will have saved an extra $383.43.
Why are regular deposits important?
Though interest rates help your savings grow, making regular deposits is the best way to reach your savings goals. Setting aside a portion of your regular paycheck, even if it’s only $20 some weeks, helps you reach your savings goal a whole lot quicker.
Setting up an automatic deposit from your paycheck each pay period is an easy way to save without thinking about it.
Roberta's regular deposits
Roberta is 18 years old and doesn’t have a particular savings goal in mind, but she wants to start putting money aside for the future. Her grandmother gave her a $1,000 check for her 18th birthday, and Roberta decides to deposit the money into a savings account. However, she also vows to become a more disciplined saver and start putting money aside regularly.
Roberta doesn’t save any money from her weekly paycheck, but realizes that cutting back on online shopping could save her $50 a week. If she cuts other unnecessary expenses, like the gym membership she never uses, she can save $100 each week.
By depositing $100 a week Roberta can save $29,204.34 after five years — only $15,183.06 with $50 deposits weekly.
|$0 weekly deposit||$50 weekly deposit||$100 weekly deposit|
|Interest rate||3% APY||3% APY||3% APY|
|Ongoing weekly deposit||$0||$50||$100|
|Amount saved after 1 year||$1,030.45||$3,669.07||$6,307.69|
|Amount saved after 3 years||$1,094.15||$9,253.46||$17,412.77|
|Amount saved after 5 years||$1,030.45||$15,183.06||$29,204.34|
With the help of a realistic savings plan and a competitive savings account, you can grow your savings over time so that you can afford big purchases, like a new home or college degree, and stay financially stable.
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