What one extra percentage point earns on $20,000 in savings

An extra percentage point of annual percentage yield can mean $200 more interest on $20,000 over one full year. That result assumes the entire starting balance stays deposited, interest remains in the account, and the two APYs stay at a hypothetical 3% and 4% for the year. It is before taxes and fees, and it is not a current account offer or a promise of earnings.

Turning a yield difference into dollars gives you a starting point for comparison. You can then decide whether the extra interest is meaningful enough to examine the account’s costs, conditions and access to your money.

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The one-year calculation

For this hypothetical example, multiply the starting balance by each APY expressed as a decimal:

• At 3% APY: $20,000 × 0.03 = $600 in interest.
• At 4% APY: $20,000 × 0.04 = $800 in interest.
• The difference is $200, leaving year-end balances of $20,600 and $20,800 respectively.

APY measures an annual yield that incorporates the effect of compounding. The CFPB’s APY calculation rules explain that relationship. Because compounding is already reflected in APY, do not take a 4% APY and compound that annual figure daily again.

The gap from 3% to 4% is one percentage point: 4 minus 3. It is not a 1% relative increase in the yield. To calculate the dollar difference here, use the gap as a decimal: $20,000 × 0.01 = $200.

What the same gap means at other balances

These are hypothetical one-year results with constant APYs applying to the whole balance, no deposits or withdrawals, interest retained, and no taxes or fees deducted.

The same one-point gap produces a larger dollar difference on a larger starting balance. Use the amount you actually expect to keep saved, rather than a balance you hope to reach later.

Why your actual result may differ

Savings APYs can change. A yield available today may not last all year, and a rate offered for only part of a year cannot be used as though it applied for the entire year.

Check whether the quoted APY applies to your whole balance and whether you must meet particular conditions to receive it. The CFPB’s account-disclosure rules cover variable-rate information and minimum balances needed to obtain a disclosed APY.

Deposits and withdrawals change the money earning interest and the time it remains deposited. Account fees also reduce what you keep. The $200 illustration does not establish a monthly payment amount or tell you when interest will be credited.

Use the dollar figure to ask better questions

Before moving savings, put three answers side by side: the extra interest under clearly stated assumptions, the costs or conditions you would take on, and whether you can access the money when needed.

For example, ask whether a balance requirement would force you to leave more cash in the account than you intended. Check the withdrawal and transfer terms against the purpose of the savings. A larger quoted APY alone does not settle those choices.

For more background on account features, the CompareAccounts savings-account guide explains the basics. For a one-year APY comparison, keep the first calculation simple: starting balance multiplied by the yield gap, with the assumptions beside the answer.