Compound Interest Calculator: What a Savings Balance Becomes at a Given APY

Enter a balance, the APY the bank quotes, anything you add each month, and how long you plan to leave it — the table returns the balance and the interest earned at the end of every year.

A rate quoted as a percentage does not tell you how many dollars you end up with. This calculator turns an APY into a year-by-year table of what you put in, what the account paid you, and where the balance stands.

Filling in the four boxes

Starting balance is what sits in the account today, or what you would open it with. The field accepts zero, the right entry if you are building the balance entirely from monthly deposits.

APY is the annual percentage yield, a disclosed figure rather than something to estimate. Under the Truth in Savings Act — Regulation DD, 12 CFR Part 1030, for banks, and NCUA's 12 CFR Part 707 for federally insured credit unions — the institution must state the annual percentage yield in the account disclosures you receive before opening, and in any advertisement that mentions a rate. In that disclosure the APY sits beside a second, smaller number labelled the interest rate; use the APY. The field caps at 20%, since higher entries are nearly always typos.

Added each month is a recurring deposit — a split off a paycheck, a standing transfer from checking. It stays the same every month for the whole horizon; there is no escalation or pause. Leave it at zero to model a balance you simply park. Years runs from 1 to 30, and anything larger is clamped to 30 before the table is built.

Why the APY is not divided by twelve

The instinct is to take an APY of 4% and call it a third of a percent a month. This calculator avoids that step, and the reason is what APY means. A nominal interest rate is the per-period rate quoted before the institution's compounding is applied. The APY is the finished figure — what a dollar becomes over a year with that compounding already inside it. Regulation DD fixes how it is computed, in the formulas at Appendix A of Part 1030, so that one bank's number can be set against another's.

Because the APY is already an annual result, the calculator works backwards from it. It solves for the monthly rate that, applied twelve times, reproduces the APY exactly: (1 + APY) raised to the power of one-twelfth, minus one. Suppose the APY entered is 4.00%. The monthly step used is 0.327374%, not 0.333333%. Dividing by twelve and compounding those twelve months would grow the balance about 4.07% in a year — more than the 4.00% promised — and the overstatement compounds every year after.

Inside each month the order is fixed: interest is applied to the balance first, then the deposit is added. A deposit made in the first month of a five-year run therefore earns for 59 months, not 60. That is the conservative convention, and worth knowing: a bank paying on your average daily balance credits slightly more when a transfer lands early in the month.

Reading the four columns

Both middle columns are cumulative, the detail most people misread. You put in is the starting balance plus every deposit through the end of that year, not that year's deposits alone. Interest earned is the balance minus everything you put in, so it is all interest since day one. To isolate a single year, subtract the previous row.

Suppose $10,000 to open, an APY of 4.00%, $200 added each month, over five years. Year 1 closes with $12,400 put in, $443.69 of interest, and a balance of $12,843.69. Year 5 closes with $22,000 put in, $3,402.33 of cumulative interest, and a balance of $25,402.33. Year 4's cumulative interest is $2,475.62, so the fifth year alone paid $926.71 — more than double the first year's $443.69, on a rate that never moved. Nothing improved except the size of the balance carrying it.

Where the projection stops being reliable

Every figure is before tax. Interest on a deposit account is generally taxable as ordinary income in the year it is credited, and the institution reports it on Form 1099-INT. The Interest earned column is gross, so what you keep depends on your marginal rate. Our note on what an APY figure includes covers where that distinction bites.

The rate is held constant for the whole horizon. For a certificate of deposit inside its term that is fair, since the rate is contractually fixed. For a savings or money market account it is not: those APYs are variable and can be changed, so a 10-year run at today's quoted rate is an illustration, not a forecast. If that trade-off is the real question, the comparison between locking a rate and staying liquid is the better starting point.

Three further gaps. Fees are absent — a monthly maintenance charge, or a minimum-balance condition you fall below, reduces every row. Withdrawals are absent too — the deposit field accepts nothing below zero. And the dollars are nominal, so a balance 20 years out will not buy what that figure buys today. One boundary to watch as the projection grows: FDIC deposit insurance covers up to $250,000 per depositor, per insured bank, for each account ownership category, and the table prints past that line without comment.

Three things people ask about this table

Why isn't year 1's interest just my balance times the APY?

It is, when there are no deposits. Suppose $10,000 at 4.00% APY with the monthly addition set to zero: the first year ends at exactly $10,400. Add monthly deposits and each one has been in the account for only part of the year, so first-year interest lands below balance × APY. The gap closes as deposits accumulate into the balance being compounded.

My bank compounds daily. Does entering the APY still give the right answer?

For the annual figures, yes — that is what APY is built for. The institution's compounding frequency is already inside the APY it discloses, so twelve monthly steps here reproduce the same annual growth as a daily-compounding account at the same APY. With no monthly deposits the year-end balances match exactly. With deposits, the month-end timing above can shift the result slightly either way.

What do I enter for an account with a promotional rate?

The field takes one rate and the shortest horizon is one year, so a six-month introductory APY cannot be modelled directly. Bracket it instead: run the term at the promotional APY for an upper bound, run it again at the go-to APY for a lower bound, and read the real outcome as sitting between them. If the promotional period is a year or longer, chain two runs: the first run's year-end balance becomes the starting balance for a second at the go-to rate.