Best Compound Interest  Savings Accounts

• National Savings Rate Average*: 0.33%
• See 10x & higher rates from our partners

Compare compound interest savings accounts with ease, find the right one for you, and open your account in minutes.

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Fund your new account & take advantage of the power of compound interest today!

To recap our recommendations.

Best Savings Accounts According To CompareAccounts™

Western Alliance Bank® High Yield Savings Account: 4.75% APY

American Express® High Yield Savings Account: 3.75% APY as of March 29, 2023

Ponce Bank® Money Market Account: 3.25% APY

Discover® Bank Online Savings Account: 3.60% APY

CIT Bank® High Yield Savings Connect Account: 4.20% APY

Liberty Savings Bank™ High-Yield Savings Account: 4.15% APY

MPH.Bank™ Money Market Account: 4.25% APY

Customers Also Viewed: High-Yield Certificate of Deposit Accounts

Frequently Asked Questions About Compound Interest Savings Accounts

What is a Savings Account?

A savings account is a type of bank account that offers a higher Annual Percentage Yield (APY) than a checking account.

Money in your savings account earns interest that compounds at set intervals. This compounding interest allows your money to make money for you.

A checking account is used for money that needs to be moved quickly such as to pay bills or use for everyday spending.

Whereas a savings account is a better option for money that doesn’t need to be used right away, for example, your emergency fund.

How to Find The Best Savings Account?

Arguably the best way to find the best savings accounts is right here on compareaccounts.com. Although we don’t showcase every single savings account available, we stand by our recommendations as the highest tier of the best accounts in America.

Why are Online Savings Accounts Better Than Traditional Ones?

Traditional banks offer low rates on savings accounts. This is because they’re managing insanely large amounts of money and need to manage their risk profile. The less “guaranteed returns” they provide, the less risky their overall portfolio becomes. As a result, traditional banks only offer about .01-.10% interest on their savings accounts. A high yield account offers up to 4.25% interest on your savings. Which is much higher than 10x the national average. Now you know why so many people are switching to a high-yield savings account.

Is My Money Safe?

Yes! Savings accounts listed on this page are protected by the Federal Deposit Insurance Corporation (FDIC). The Federal Deposit Insurance Corporation insures Bank and thrift deposits of up to $250,000.

How Do I Open a Savings Account?

Easy. Simply pick your bank and click on the “open account” button above. Once you arrive at our partner’s site, you’ll be able to open your new savings account safely and securely.

What is Compound Interest?

Compound interest is the interest that is earned on the initial principal of a loan or deposit, as well as on the accumulated interest of previous periods. In other words, compound interest is the interest that is calculated not only on the initial amount of money that you deposit or borrow, but also on the interest that has been accumulating over time.

For example, let’s say that you deposit $1000 in a savings account that earns 3% annual compound interest. After the first year, you will have earned $30 in interest, so the balance of your account will be $1030. In the second year, you will earn 3% interest on the new balance of $1030, which is $30.90. This means that your balance at the end of the second year will be $1060.90.

Compound interest can be a powerful tool for growing your wealth over time, especially if you are able to save and invest a large amount of money. However, it can also work against you if you are borrowing money and have to pay compound interest on your loans. In this case, the interest that you pay will continue to grow over time, which can make it more difficult to pay off your debt.

How to Calculate Compound Interest:

There are several ways to calculate compound interest, but one common method is to use the following formula:

Compound Interest = Principal * (1 + Interest Rate/n)^(n*t) – Principal

In this formula, “Principal” is the initial amount of money that you are depositing or borrowing, “Interest Rate” is the annual interest rate, “n” is the number of times that interest is compounded per year, and “t” is the number of years that the money is invested or borrowed.

Here is the same example with a 3% annual interest rate and quarterly compound interest:

Let’s say that you have a savings account with an initial balance of $1000 and an annual interest rate of 3%. The interest is compounded quarterly, which means that n = 4. If you leave the money in the account for 2 years, then t = 2. To calculate the compound interest earned over these 2 years, we can use the following formula:

Compound Interest = Principal * (1 + Interest Rate/n)^(n*t) – Principal

Plugging in the values from the example, we get:

Compound Interest = $1000 * (1 + 0.03/4)^(4*2) – $1000

= $1000 * (1.0075)^8 – $1000

= $1060.38 – $1000

= $60.38

This means that you would have earned a total of $60.38 in compound interest on your initial deposit of $1000 over the course of 2 years, with a 3% annual interest rate and quarterly compound interest.

However, many of the savings accounts we recommend compound interest daily. This means that you’ll earn a slightly higher return the longer you leave your funds in the account.

When it comes to compound interest, higher is always better.

Before the invention of electronic calculators, bankers and other financial professionals used various methods to calculate compound interest. These methods included:

1. Using tables: Some bankers used tables that provided pre-calculated values for compound interest, based on different interest rates and time periods. These tables could be used to quickly and easily determine the amount of compound interest that would be earned or paid on a given principal.

2. Using slide rules: Slide rules were mechanical devices that could be used to perform mathematical calculations, including compound interest. To use a slide rule to calculate compound interest, a financial professional would set the interest rate and time period on the slide rule, and then use the device to determine the compound interest.

3. Using pencil and paper: Some bankers and financial professionals calculated compound interest by hand, using pencil and paper. This method involved using the compound interest formula to perform the necessary calculations.

4. Using mechanical calculators: Mechanical calculators were early mechanical devices that could be used to perform mathematical calculations, including compound interest. These calculators were more advanced than slide rules, and could perform a wider range of calculations. However, they were still slower and less accurate than modern electronic calculators.

Compound Interest the 8th Wonder of the World

Albert Einstein is often credited with saying that “compound interest is the eighth wonder of the world,” and that “he who understands it, earns it; he who doesn’t, pays it.”

Einstein’s quote highlights the power of compound interest to generate wealth over time. When you earn compound interest on your investments or savings, the interest that you earn in each subsequent period is based not only on the initial amount of money that you invested, but also on the accumulated interest of previous periods. This means that the longer you leave your money invested or saved, the more compound interest you will earn, and the faster your wealth will grow.

On the other hand, if you have to pay compound interest on a loan or debt, the interest that you pay will continue to grow over time, which can make it more difficult to pay off the debt. In this case, understanding the principle of compound interest can help you make informed decisions about borrowing and repayment, and avoid paying more interest than necessary.

Warren Buffet, a successful investor and business magnate, has also spoken about the power of compound interest. In one of his annual letters to shareholders, Buffet wrote:

“The most powerful force in the universe is compound interest. He who understands it, earns it … he who doesn’t … pays it. Einstein called it the greatest mathematical discovery of all time.”

Buffet’s quote emphasizes the importance of understanding compound interest and how it can be used to grow wealth over time. By investing and saving wisely, and taking advantage of the power of compound interest, it is possible to build a significant amount of wealth over the long term. On the other hand, if you don’t understand compound interest, or if you make poor financial decisions that result in paying high levels of interest on debt, you may end up losing money rather than earning it.

When it comes to investing you should listen to people like Albert Einstein and Warren Buffet. That’s why its important to have a savings account that not only compounds interest, but that has a high yield and preferrably compounds on a daily basis.

To take advantage of the power of compound interest, it is important to start saving and investing as early as possible. The longer you are able to leave your money invested, the more compound interest you will earn, and the faster your wealth will grow.

*National Savings Rate Average as published by FDIC