See exactly how much interest your savings will earn. Compare account types, compounding frequencies, and term lengths side by side.
Compound interest means you earn interest on your interest. The more frequently interest compounds, the faster your money grows. Daily compounding (used by most high-yield savings accounts and online banks) provides the highest effective yield.
APY (Annual Percentage Yield) reflects the actual return you'll earn in one year including the effects of compounding. APR is the simple annual rate. Always compare savings account yields using APY. A 5% APR compounded daily produces an APY of approximately 5.13%.
Yes — interest earned in taxable savings accounts and CDs is ordinary income, reported on a 1099-INT. You'll owe income tax at your marginal rate on all interest earned each year (not just when you withdraw). Consider I-Bonds, municipal bonds, or tax-advantaged accounts to reduce this tax drag.
Use a CD if: you won't need the money for a fixed term and want to lock in a rate. Use a HYSA if: you want flexibility or might need to access funds. A CD ladder (multiple CDs with staggered maturity dates) gives you both higher rates and regular liquidity.