# Guide to Calculating the Interest Earned in a Savings Account

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## What Is Interest Earned on Savings?

## Simple Interest vs. Compound Interest

## Calculating Simple Interest on a Savings Account

**A = R x T x P**

A = amount of interest R = rate T = time period P = principal (your account balance)

## Calculating Compound Interest on a Savings Account

**A = P(1 + R/N)**

^{NT}A = amount of interest R = rate T = time period; in this case, 1 year P = principal (your account balance) N = compounding period (in this case, 12 times a year)

**1,000(1 + .01/12)**

^{12x1}

*Recommended:*

*How Much the Average American Has in Savings*## Calculating Interest With a Spreadsheet

## Calculating Annual Percentage Yield

**APY = (1 + R/N)**

^{N}**– 1**

R = interest rate N = number of times the interest is compounded per year

**(1 + .01/365)**

^{365}**- 1**

**(1 + .01/12)**

^{12}**- 1**

**(1 + .01/4)**

^{4}**- 1**

## Where You Can Find the Interest Rate on Your Savings Accounts

*Recommended:*

*How To Transfer Money Between Banks*## Ways to Earn More Interest With a Savings Account

## The Takeaway

*Compare today’s high-yield savings rates, including fees and balance minimums.*

### Frequently Asked Questions

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