Project savings account growth over time with initial deposit, recurring contributions, interest rate, and compounding frequency.
A savings calculator turns an interest rate into a dollar path. Give it an initial deposit, a monthly contribution, an annual rate, a compounding frequency, and a term, and it projects the balance period by period, crediting interest on top of interest so growth accelerates over time. The number people most often misread is the rate itself: it is a nominal annual rate, not the effective yield, so 6% compounded monthly actually earns about 6.17% per year. The projection also assumes the rate and the contribution never change, which no bank guarantees.
A concrete input and expected output from the current implementation.
Input
Initial deposit: $1,000 Monthly contribution: $100 Annual interest rate: 6% Compounding frequency: Monthly Term: 5 years
Expected output
Ending balance: $8,325.85 Total contributed: $7,000.00 Total interest earned: $1,325.85
Each of the 60 months applies a 0.5% rate (6% divided by 12). The initial $1,000 compounds to $1,348.85, and $100 per month accumulates to $6,977.00 via the annuity factor 69.7700, for a total of $8,325.85. Interest is the balance minus the $7,000.00 actually deposited, assuming contributions are made at the end of each month.
The calculator divides the year into equal compounding periods - monthly, quarterly, or annually. Each period it applies the annual rate divided by the number of periods to the current balance, credits that interest, then repeats for the next period. Because interest is computed on interest already credited, the balance grows exponentially rather than linearly: later years add far more interest than early ones.
The result separates money you put in - the initial deposit plus every contribution - from interest the balance earned. In the first years contributions dominate; only after roughly two decades at a 6% rate does earned interest exceed total deposits. Comparing the two lines shows how much of the ending balance is effort you control versus the rate the bank pays.
Modestly. On the initial $1,000 alone at 6% nominal over 5 years, monthly compounding ends at $1,348.85 versus $1,338.23 with annual compounding - about 0.8% more. The gap grows with higher rates and longer terms, which is why banks advertise the effective annual yield (6.17% for 6% compounded monthly) next to the nominal rate.
Not exactly. The tool assumes one fixed rate and one fixed contribution for the whole term, and banks change APYs whenever they like, so a real balance will drift from the projection. Use it to compare scenarios and set contribution targets, then re-run it when the account's rate changes. In a taxable account, interest becomes 1099-INT income, so what you keep is the balance minus tax on the interest.
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