# Guide to Calculating the Interest Earned in a Savings Account

Share this article:

Editor’s note: Lantern by SoFi seeks to provide content that is objective, independent and accurate. Writers are separate from our business operation and do not receive direct compensation from advertisers or partners. Read more about our Editorial Guidelines and How We Make Money.

## 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

### About the Author

Share this article: