$2,500 in savings at 2% APY
Based on a default 5-year period, daily compounding, and no further deposits. Use the calculator below to adjust any input.
Projected Balance After 5 Years
$2,763
Example
Starting with $2,500 and contributing $0/month for 5 years at a 2% APY, your balance would grow to approximately $2,763 — $263 of that is interest earned.
Total Deposits
$2,500
Interest Earned
$263
After-Tax Interest
$205
Real (inflation-adjusted) purchasing power
$2,379
in today's dollars, after estimated taxes and inflation
Projected balance, split between your deposits and interest earned
- Your Deposits: $2,500
- Interest Earned: $263
What is a Savings Calculator?
A savings calculator projects how a bank savings balance grows over time from three sources: your starting balance, any regular deposits, and interest paid by the bank — expressed as an Annual Percentage Yield (APY) that already accounts for compounding. Unlike investment returns, savings account interest is contractually guaranteed by the bank (up to FDIC limits), not a market estimate.
Because savings rates are usually lower than long-run inflation, this calculator also shows an after-tax, inflation-adjusted balance — the closest estimate of how much real purchasing power your savings will actually have when you go to spend it.
Balance growth vs. deposits over time
Year-by-Year Balance Schedule
| Year | Deposits | Interest | Balance |
|---|---|---|---|
| 0 | $2,500 | $0 | $2,500 |
| 1 | $2,500 | $51 | $2,551 |
| 2 | $2,500 | $102 | $2,602 |
| 3 | $2,500 | $155 | $2,655 |
| 4 | $2,500 | $208 | $2,708 |
| 5 | $2,500 | $263 | $2,763 |
Balance by Compounding Frequency
Every row uses your exact balance, deposit, rate, and term — only the compounding frequency changes. This shows how much difference more frequent compounding actually makes at your numbers.
| Compounding | Ending Balance | Interest Earned |
|---|---|---|
| Annually | $2,760 | $260 |
| Semiannually | $2,762 | $262 |
| Quarterly | $2,762 | $262 |
| Monthly | $2,763 | $263 |
| Daily | $2,763 | $263 |
How Is Savings Growth Calculated?
This calculator assumes deposits are made at the end of each period and grows both the starting balance and the stream of deposits at the compounding frequency you select. Because APY already bakes in compounding, a 5% APY compounded daily earns slightly more over a year than the same nominal rate compounded annually — the calculator models this directly by letting you pick the compounding frequency.
- P — starting balance
- D — deposit per compounding period
- r — rate per period (APY ÷ periods per year)
- n — total number of compounding periods
Savings Accounts vs. Money Market Accounts vs. CDs
Traditional savings accounts are FDIC-insured bank accounts that pay interest but limit withdrawals — federal rules historically capped "convenient" withdrawals (transfers, debit-linked withdrawals) at six per month, though many banks have relaxed this since the rule was suspended. Money market accounts often pay higher rates than plain savings accounts because the bank invests the underlying deposits in short-term securities rather than only loans, and some come with limited check-writing or debit card access. Certificates of Deposit (CDs) typically pay the highest guaranteed rate of the three in exchange for locking your money up for a fixed term — withdrawing early usually triggers a penalty.
FDIC insurance protects up to $250,000 per depositor, per insured bank, per ownership category — not per account. A single person with $300,000 in savings at one bank has $50,000 that is not federally insured; spreading funds across multiple banks (or ownership categories, like joint vs. individual accounts) keeps every dollar covered.
How Much Should You Keep in Savings?
A common baseline is an emergency fund covering three to six months of essential living expenses, kept liquid rather than invested, so it's available immediately without selling investments at a bad time. Beyond the emergency fund, popular budgeting guidelines include the "10% rule" (saving 10% of every paycheck) and the "50-30-20 rule" (50% of income to necessities, 30% to discretionary spending, and the remaining 20% split between debt paydown and savings). These are starting points, not universal answers — individual circumstances like income stability, dependents, and existing debt should adjust the target.
Because savings rates typically trail long-run inflation, money kept in savings beyond what your emergency fund and near-term goals require tends to lose purchasing power over long horizons compared to investing it — which is why this calculator's inflation-adjusted balance is worth checking for any multi-year savings goal.
Example — Your Current Inputs
Starting with $2,500 and contributing $0/month for 5 years at a 2% APY, your balance would grow to approximately $2,763 — $263 of that is interest earned.
After estimated taxes and 2.6% annual inflation, that balance is worth approximately $2,379 in today's purchasing power.
Additional Example — Building a $2,000 Emergency Fund
The Federal Reserve has found that many households would struggle to cover a $2,000 unexpected expense from savings alone. Starting from $0 and depositing $150/month into a high-yield savings account paying 4.5% APY, that $2,000 emergency fund target is reached in about 13 months — with roughly $60 of that final balance coming from interest rather than deposits.
Doubling the deposit to $300/month cuts the time to about 6.5 months. This is a good illustration of why, for short time horizons, the deposit amount matters far more than the interest rate — compounding needs years, not months, to meaningfully outpace your own contributions.
About These Parameters
- Starting Balance & Monthly Deposit
- The starting balance is what's in the account today; the monthly deposit is added on top every month for the full time period. Both grow together at the APY you enter.
- Annual Percentage Yield (APY)
- The rate your bank actually advertises — it already reflects compounding, unlike a plain nominal interest rate. High-yield online savings accounts commonly pay several times the national average rate offered by traditional brick-and-mortar banks, so it's worth comparing rates before parking a large balance.
- Marginal Tax Rate & Inflation Rate
- Interest from a regular savings account is taxed as ordinary income in the year it's earned, so the marginal tax rate estimates your real take-home interest. The inflation rate is used only to show your ending balance in today's purchasing power, since a dollar earned five years from now buys less than a dollar today.
Frequently Asked Questions
Is my money safe in a savings account?
Yes, up to $250,000 per depositor, per insured bank, per ownership category, through FDIC insurance (or NCUA insurance at credit unions). This is fundamentally different protection from investments like stocks or bonds, which can lose value — savings account principal is not at market risk, only the interest rate you earn can change over time.
Why is my bank's savings rate so much lower than the rates I see advertised online?
Large traditional banks often pay a fraction of a percent because they don't need to compete aggressively for deposits — they have other funding sources. Online-only banks and some credit unions pay meaningfully more since they have lower overhead and use higher rates to attract deposits. Shopping around, even just once a year, is one of the easiest ways to improve a savings account's real return with zero added risk.
Should I keep all my savings in a savings account?
For money you need within the next few years — an emergency fund, a near-term down payment, planned large purchases — a savings account is usually the right place, since the principal doesn't fluctuate. For longer-horizon goals where you can tolerate short-term ups and downs, savings account rates typically trail inflation and long-run investment returns, so keeping a large surplus purely in savings can mean losing purchasing power over many years compared to investing it.
What's the difference between interest rate and APY?
The nominal interest rate is the stated annual rate before compounding; APY is the actual annual return you earn after compounding is applied. A 5% rate compounded daily produces an APY slightly above 5% (about 5.13%), because interest earned early in the year starts earning its own interest. Banks are required to advertise APY specifically so customers can compare accounts on a like-for-like basis regardless of each bank's compounding schedule.