What your savings really earns
The APY on a savings account looks simple, but two things quietly eat into it: the tax you owe on the interest each year, and inflation steadily reducing what a dollar buys. The headline balance can look healthy while your real, after-tax position barely moves. This calculator shows all three numbers side by side.
How APY compounds
monthly rate = (1 + APY)1/12 − 1
APY is the effective yearly yield, so we convert it to a monthly growth rate and apply it each month before adding your deposit. That reproduces the bank’s advertised yield exactly — no guessing at a nominal rate or a compounding frequency.
What makes this calculator different
- Built on APY. It takes the exact number banks advertise, so compounding is precise instead of approximated from a nominal rate.
- Tax on interest. Savings interest is taxable income — most calculators skip this. We apply your tax rate to show the after-tax balance you actually keep.
- Inflation-adjusted value. Cash savings often barely keeps up with inflation, so we show the real, today’s-dollars value — and warn you when your APY is losing to inflation.
- Full schedule. A year-by-year breakdown and chart, with a nominal vs. real toggle and exportable CSV.
Frequently asked questions
What’s the difference between APY and interest rate?+
The interest rate is the base rate the bank pays, while APY (annual percentage yield) folds compounding into a single effective yearly number. Because interest earns interest through the year, the APY is always slightly higher than the nominal rate. APY is the apples-to-apples figure to compare accounts on, which is why this calculator takes APY directly — the monthly growth is derived as (1 + APY)^(1/12) − 1 so the projection matches what the bank advertises exactly.
Is interest from a savings account taxable?+
Yes. In the U.S., interest earned in an ordinary savings or high-yield savings account is taxed as ordinary income in the year you earn it — your bank reports it on a 1099-INT. That means your true take-home growth is lower than the headline balance. This calculator applies your income tax rate to the interest so you can see the after-tax value, which most savings calculators ignore.
What is a high-yield savings account?+
A high-yield savings account (HYSA) pays a much higher APY than a traditional brick-and-mortar savings account — often many times more. They are typically offered by online banks with lower overhead, are FDIC-insured up to the usual limits, and keep your money liquid. Bumping the APY in this calculator shows how large the difference compounds to over time.
Savings account vs. investing — which should I choose?+
Savings accounts are for money you may need soon or cannot afford to lose: an emergency fund, a near-term goal, FDIC-insured and liquid. Investing (stocks, index funds) has historically delivered far higher long-run returns but with volatility and no guarantee, so it suits long horizons. A common approach is to keep an emergency fund in a high-yield savings account and invest money you won’t touch for years.
How do I beat inflation with my savings?+
If your APY is below the inflation rate, your money grows in dollars but shrinks in real purchasing power — this calculator flags that and shows the inflation-adjusted value. To keep up, look for a high-yield savings account whose APY meets or beats inflation, and for long-term money consider investing, which has historically outpaced inflation by a wider margin than cash savings.
Disclaimer: This calculator is for educational purposes only. Actual APYs, tax treatment, and inflation vary by bank, account, and jurisdiction, and rates on savings accounts can change at any time. It is not financial or tax advice.