High-Yield Savings vs Regular Savings Calculator

Why the account you choose matters

Interest rates on savings accounts vary enormously between banks. Online banks and credit unions often pay several times more than the large branch banks, whose standard savings accounts have long paid well under 1%. The FDIC publishes a national average savings rate that has typically sat well below 1%, while competitive high-yield accounts have paid around 4% at times when central bank rates are high.

On a $15,000 emergency fund, the difference between 0.4% and 4% is about $540 a year, for doing nothing more than moving the money. The calculator converts each APY into a monthly rate and adds your deposits so you can see the gap grow.

What to check before switching

Make sure the account is insured: in the US, look for FDIC insurance at banks or NCUA insurance at credit unions, which cover up to $250,000 per depositor, per institution, per ownership category. Check for monthly fees, minimum balances and how quickly transfers reach your checking account. High-yield rates are variable and fall when central banks cut rates, so revisit your choice once a year.

What the gap looks like after tax

With $15,000 and $200 a month for three years, a 4% account ends near $24,500 and a 0.4% account near $22,400, a gap of about $2,080. Savings interest is taxed as ordinary income, so in the 22% federal bracket you keep about $1,620 of that difference, still well worth a few minutes of setting up an account.

Rates on high-yield accounts change with the Federal Reserve's rate decisions, so the gap can narrow or widen over time. Keeping an eye on your rate once or twice a year is usually enough.