How Recurring Savings Interest Is Calculated
When you make regular monthly deposits, each deposit earns interest for a different number of months. The total interest for a simple-interest savings plan is:
- Interest = Monthly Deposit × (Rate/12) × n(n+1)/2
- Total Balance = Total Deposits + Interest
Higher-yield savings accounts (HYSAs) and CDs often offer APYs well above traditional savings accounts. Compare rates to maximize your returns while keeping funds accessible.
Frequently Asked Questions
How does compounding affect my interest?
Compounding means interest earns additional interest. This calculator uses a simple interest model per deposit. For accounts that compound daily or monthly, actual earnings may be slightly higher.
What is the best account for recurring savings?
High-yield savings accounts (HYSA) or certificates of deposit (CD) typically offer better APYs than standard savings. Consider CDs for funds you won't need until maturity.