Explore How Compound Interest Helps Your Balance Grow

Understanding the Power of Compound Interest for Growing Your Savings

Creating and growing a savings account is one of the best things you can do for yourself to achieve a meaningful financial goal or to provide yourself with a sense of financial freedom in your retirement years. And one of the best things you can do for your savings is to understand the benefits of compound interest and the significant impact it can have on growing your savings.

Using our Compound Interest Calculator, see how your savings can grow with an Annual Percentage Yield (APY) within a specific evaluation period. To get started, have the following information available:

• Savings Amount: The specific dollar amount you'd like to evaluate over the chosen evaluation period.
• Interest Rate: The interest rate you will receive on your initial savings deposit.
• Evaluation Period: In years, select the range of time you'd like to examine the growth of your savings using compound interest.

The Benefits of Compound Interest

The first and biggest benefit of compound interest is the exponential growth your savings experience. The longer your money is deposited with compound interest building, the more pronounced this effect will become.

By starting to save early, you give your savings more time to grow and compound over the years. Even if you are only able to contribute minimal amounts toward your savings in your younger years, making that a consistent habit and increasing the amount you add to your savings can pay off big time come retirement time.

Another benefit is the minimal effort needed for maximum gain. All you need to do is make your initial principal deposit and compound interest will take the lead from there. Plus, with this type of interest, you don't need to continually add large sums to your savings account—just let the interest do the work and contribute when you can.

Finally, inflation can be unpredictable. Compound interest can help offset the negative impacts of inflation because your savings are growing in tandem with cost-of-living increases—helping you maintain the level of purchasing power you are accustomed to enjoying.

3 Ways to Maximize Compound Interest

If you are just getting started in investing in a high-yield savings account, put these three simple strategies into action:

1. Start Now: The sooner you start saving, the more time your money has to grow. If you feel like you've waited too long, it's never too late to start saving for the future.
2. Make Consistent Contributions: Regularly adding to your savings can significantly increase your principal and in turn the compound interest on your account. You don't have to make huge contributions each time to see the benefits, but being consistent will reap bigger rewards.
3. Choose High-APY Accounts: Shop around for savings accounts or investment options with high APYs to get the maximum return.