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  • Sarah Silvers

Savings Calculator -- Calculating interest on a High-yield savings account

A savings account can be a great way to earn interest on your money while keeping it safe and easily accessible. However, it's important to understand how to calculate the annual percentage yield (APY) on your savings account and estimate your potential earnings. In this article, we'll guide you through the steps to calculate your APY and estimate your income from a high yield savings account. Here's a basic calculator to help you understand how much you can generate from an HSA account:

Step 1: Understand the Basics of APY

APY is a measure of the total amount of interest you can earn on your savings account over one year, expressed as a percentage of the account balance. It includes the effect of compounding interest, which means that the interest earned in previous periods is added to the account balance and earns interest in the next period.

Step 2: Find the APY of Your Savings Account

To find the APY of your savings account, look for the interest rate and compounding frequency in the account details. For example, if your account has an interest rate of 1% and compounds interest monthly, the APY can be calculated as follows:

APY = (1 + 0.01/12)^12 - 1 = 1.01^12 - 1 = 1.1268 - 1 = 0.1268 = 12.68%

Step 3: Estimate Your Earnings from a High Yield Savings Account

Once you know your APY, you can estimate your earnings from a high yield savings account. For example, if you have $10,000 in a high yield savings account with an APY of 2%, the interest earned in one year can be calculated as follows:

Interest earned = $10,000 x 0.02 = $200

This means that you can earn $200 in interest in one year from your high yield savings account.

Step 4: Monitor and Adjust Your Savings Strategy

It's important to monitor your savings and adjust your strategy as needed to maximize your earnings. Consider increasing your savings rate or moving your funds to a higher yielding account if the interest rates change. Regularly reviewing your savings and earnings can help you achieve your financial goals.

In conclusion, calculating the APY on your savings account and estimating your earnings from a high yield savings account can help you make informed financial decisions. By understanding the basics of APY and monitoring your savings strategy, you can maximize your earnings and achieve your financial goals.

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