How to use the savings calculator
- Enter your initial deposit, the amount you start with.
- Choose a monthly or yearly deposit schedule and enter the deposit.
- Enter how much you will increase your deposits each year, for example 3% to keep pace with pay rises. Use 0 for flat deposits.
- Enter the account's interest rate as an APY and the number of years.
- Optionally, enter the tax rate you pay on interest.
The results show the ending balance, how much of it is your deposits and how much is interest, and a table with the deposit, interest and balance for every year.
How the balance is calculated
The APY (annual percentage yield) already includes compounding, so the calculator converts it to the monthly rate that produces exactly that yield over twelve months. Deposits are made at the end of each month (or year) and step up by g, the yearly increase, at the start of every new year. If you enter a tax rate, that share of each year's interest is removed at the end of the year.
Without tax, the whole thing has a closed form: balance = P × (1 + APY)^Y + s × d × ((1 + APY)^Y − (1 + g)^Y) ÷ (APY − g), where s is what twelve monthly deposits of $1 are worth at the end of their year.
Worked example
The defaults are a $5,000 initial deposit, $200 a month rising 3% a year, at 4% APY for 10 years, no tax.
- Monthly rate: 1.04^(1/12) − 1 = 0.32737%.
- The $5,000 grows to $5,000 × 1.04^10 = $5,000 × 1.480244 = $7,401.22.
- Twelve deposits of $1 are worth s = 0.04 ÷ 0.0032737 = 12.2184 at the end of their year, so year 1's deposits are worth $200 × 12.2184 = $2,443.69 by December.
- The deposits over all ten years: 12.2184 × $200 × (1.480244 − 1.343916) ÷ (0.04 − 0.03) = $33,314.29.
- Ending balance: $7,401.22 + $33,314.29 = $40,715.51.
By year 10 the deposit has risen to $200 × 1.03^9 = $260.95 a month. You deposit $32,513.31 in total and earn $8,202.20 in interest.
Why raising your deposits matters
| Yearly increase in deposits | Total deposited | Interest | Balance after 10 years |
|---|---|---|---|
| 0% (flat $200) | $29,000.00 | $7,740.41 | $36,740.41 |
| 3% | $32,513.31 | $8,202.20 | $40,715.51 |
| 5% | $35,186.94 | $8,539.79 | $43,726.73 |
All rows use $5,000 to start and 4% APY. A 3% yearly step-up adds almost $4,000 to the balance, and most of that comes from your own extra deposits rather than interest. Over short periods, how much you save matters more than the rate you earn; over decades, the rate takes over.
Savings, interest and goal calculators
Use this savings calculator to plan a habit of regular deposits that grow with your income. If you have a target amount and date in mind, the savings goal calculator works out the monthly deposit you need. For a balance with a quoted rate and compounding frequency, inflation or start-of-period deposits, try the interest calculator, and for money locked up for a fixed term, the CD calculator.
Frequently asked questions
What is APY, and why does the calculator ask for it?
APY is the yearly return including compounding, and US banks must disclose it for deposit accounts under the Truth in Savings Act and its Regulation DD. Because it already includes compounding, you don't need to know whether interest is credited daily or monthly. If you only know the rate and its compounding, the interest calculator takes those instead.
How is tax on savings interest handled?
Interest on an ordinary savings account is taxable in the year it is paid. The calculator takes your tax rate from each year's interest at year end, which lowers growth a little more each year. With a 24% tax rate, the example ends at $38,549.04 instead of $40,715.51.
Are deposits made at the start or the end of the month?
At the end. Each deposit starts earning interest the following month. Depositing at the start instead would add roughly one month of interest on each deposit, a small difference on monthly plans.
Does a higher deposit increase or a higher APY help more?
Over ten years, usually the deposit increase. In the example, raising deposits 3% a year ends at $40,715.51, while keeping them flat at a 5% APY instead of 4% ends at $39,017.11. Over thirty years or more, compounding does more of the work and the rate becomes more important.
Related calculators
- Savings Goal Calculator — How much to save each month to reach a goal by a date, or how long your current savings will take.
- Interest Calculator — Interest earned on a balance with regular deposits, any compounding, tax on interest and inflation.
- CD Calculator — What a certificate of deposit is worth at maturity, from its APY or interest rate, term and your tax rate.
- Compound Interest Calculator — How a starting balance and monthly contributions grow, with any compounding frequency.
Results are estimates for educational purposes and are not financial, tax or legal advice. See our disclaimer.