Balance at the end
$12,517.96
A quoted savings rate is not what you earn. Enter the rate an institution advertises, the balance and the period, and the calculator returns the effective annual yield, the balance at maturity, and what each compounding frequency contributes — then lets you compare it against what the average US savings account actually pays.
The rate is treated as a nominal annual rate, which is the figure institutions quote as APR. The APY in the first column is what you actually earn. Continuous compounding is shown as the mathematical limit and is not offered by deposit accounts; it is included so the table has a ceiling.
| Compounding | Effective annual yield | Balance at the end | Interest earned |
|---|---|---|---|
| Annually | 4.50% | $12,461.82 | $2,461.82 |
| Semiannually | 4.55% | $12,492.03 | $2,492.03 |
| Quarterly | 4.58% | $12,507.51 | $2,507.51 |
| Monthly | 4.59% | $12,517.96 | $2,517.96 |
| Daily | 4.60% | $12,523.05 | $2,523.05 |
| Continuous | 4.60% | $12,523.23 | $2,523.23 |
This is the single most expensive confusion in personal finance, and it is deliberately maintained by the way rates are advertised. The APR is the nominal annual rate: the figure you are told. The APY is the effective annual yield: the return you actually receive, once the interest paid during the year has itself started earning interest.
n — the number of compounding periods in a year: 1 for annual, 4 for quarterly, 12 for monthly, 365 for dailyOn the default inputs, a 4.5% rate compounded monthly is an APY of 4.59%, and $10,000 becomes $12,517.96 over five years with $2,517.96 of interest. Compounded annually, the same 4.5% produces $12,461.82 and $2,461.82 of interest. The APY is the number to compare between accounts, and it is the number the federal Truth in Savings disclosure requires institutions to state.
Compounding frequency is the part of a savings account that gets the most attention and deserves the least. On a $10,000 deposit at 4.5% over five years, here is the entire range from annual to continuous compounding.
| Compounding | Effective annual yield | Interest over 5 years |
|---|---|---|
| Annually | 4.50% | $2,461.82 |
| Semiannually | 4.55% | $2,492.03 |
| Quarterly | 4.58% | $2,507.51 |
| Monthly | 4.59% | $2,517.96 |
| Daily | 4.60% | $2,523.05 |
| Continuous (the limit) | 4.60% | $2,523.23 |
The whole spread from the worst case to the theoretical maximum is $61.41 across five years, which is 2.5% of the interest earned. That is not nothing, but it is small, and it is dwarfed by the interest rate itself. The practical conclusion is that an account paying a higher rate compounded annually beats a lower rate compounded daily, and the difference between the two will be obvious the moment you compare the APYs, which is precisely why institutions prefer to advertise the rate and not the yield. The gap collapses further at low rates: at 0.37%, monthly compounding adds $0.32 to a $10,000 balance over five years, against $61.23 at 4.50%.
The FDIC publishes a national rate for savings accounts every month as part of its National Rates and Rate Caps release. In September 2026 that rate was 0.37%. It is not a survey of the best offers available; it is a deposit-weighted average across every insured depository institution and credit union for which data is available, which means a handful of very large institutions with large deposit bases pull it harder than thousands of smaller ones.
| Where the money sits | Rate, September 2026 | Interest on $10,000 over 5 years |
|---|---|---|
| Savings account, national average | 0.37% | $186.69 |
| Interest checking, national average | 0.07% | $35.06 |
| Money market account, national average | 0.63% | $319.93 |
| 12-month certificate of deposit, national average | 1.73% | $902.83 |
| A competitive online account at 4.50% | 4.50% | $2,517.96 |
FDIC national deposit rates for September 2026; the 4.50% row is this calculator's default assumption, not a published national figure.
The gap between the national average savings rate and a competitive account is $2,331.27 on a $10,000 deposit over five years — about 13.5 times what the average account earns. That is the number worth remembering, because it reframes the decision: the question is not whether daily compounding beats monthly compounding, it is which institution is holding the money.
One structural detail explains part of the gap. The FDIC's own release shows a separate figure, the national rate cap, of 4.38% for savings. The cap is not a rate paid by anyone; it is a regulatory ceiling that applies only to institutions that are less than well capitalised, restricting them from attracting deposits by offering rates far above their market. Its presence at 4.38% while the national rate sits at 0.37% is a compact illustration of how far apart the average account and the competitive end of the market are.
Two caveats keep this honest. A higher advertised rate is not always available: many of the best rates come with balance caps, direct-deposit requirements or introductory periods that expire. And because savings rates are variable, a 4.50% account today may pay something quite different in two years — which is why the arithmetic here should be read as a comparison at a moment in time rather than a promise of what a deposit will earn.
The APR is the nominal annual rate quoted, and the APY is what you actually earn once interest already credited starts earning interest of its own. A 4.5% APR compounded monthly is a 4.59% APY. When comparing accounts, compare the APYs, because APR figures are not comparable across different compounding frequencies while APY figures are.
Far less than advertising suggests. On $10,000 at 4.5% over five years, the difference between annual and daily compounding is $61.23, or 2.5% of the interest earned. At lower rates it is negligible. The rate itself matters vastly more, which is why the useful comparison is between institutions rather than between compounding schedules.
The FDIC's national rate for savings was 0.37% in September 2026, down from 0.38% held from May through August. That figure is a deposit-weighted average across insured institutions, so it describes the middle of the market rather than the best offer; the same release reports a national rate cap of 4.38%, which is a regulatory ceiling for weaker institutions rather than a rate anyone pays.
On $10,000 over five years, $186.69 at the national average savings rate against $2,517.96 at 4.50% — a difference of $2,331.27, or 13.5 times as much interest. Over a longer period the gap compounds, so the same decision repeated across a decade produces a difference measured in thousands of dollars rather than hundreds. Nothing in that comparison depends on compounding frequency.
Related calculatorsCompound interest calculator · Retirement savings calculator · Credit card payoff calculator
Cluster us/savings · Unit us-high-yield-savings-calculator · Engine apy-compare / apy · Method: Effective annual yield is (1 + rate ÷ frequency) raised to the frequency, minus one; the balance is the principal grown at that effective yield for the number of years, with continuous compounding shown as a mathematical limit.