Project growth of a High-Yield Savings Account at todays top APYs (around 4.0 to 4.5%), compare to a traditional savings account at the FDIC national average, and see your after-tax interest using your federal and state tax rates.
Inputs: starting balance, monthly contribution, HYSA APY, time horizon, traditional savings APY for comparison, federal bracket, and state tax rate. Outputs include final balance, total interest, after-tax interest, the dollar gap vs traditional savings, and a year-by-year breakdown of balance and interest earned.
Disclaimer: APY is variable and can change at any time without notice. Always verify the current rate, FDIC insurance status, and account terms with the bank before depositing.
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Calculator information
📋 How to use this calculator
- Enter your starting balance (current deposit) and planned monthly contribution.
- Set HYSA APY - top US online banks pay 4.0-4.5% as of May 2026 (Ally, Marcus, Discover, SoFi, Wealthfront, CIT).
- Pick a time horizon - HYSAs work best for emergency funds and goals 1-3 years out.
- Enter a comparison APY for a traditional brick-and-mortar savings account (FDIC national average ~0.40%) to see the gap.
- Set your federal marginal tax bracket and state tax rate - interest is taxed as ordinary income.
- Result shows projected balance, total interest, after-tax interest, and the dollar advantage over traditional savings.
🧮 HYSA Growth with Monthly Contributions
FV = P x (1+r/12)^(12t) + PMT x [((1+r/12)^(12t) - 1) / (r/12)]
- P: starting balance (USD)
- PMT: monthly contribution (USD)
- r: APY as decimal (e.g., 0.045 for 4.5%)
- t: time in years
- After-tax interest = Interest x (1 - federal_marginal - state_rate)
- Most HYSAs compound daily and credit monthly (mathematically nearly identical to monthly compounding at these rates)
APY (Annual Percentage Yield) already accounts for compounding. APR (Annual Percentage Rate) does not - if a bank quotes APR, multiply by (1 + r/n)^n - 1 to get APY. HYSAs are FDIC-insured up to $250,000 per depositor per bank.
💡 Worked example: Building a 6-Month Emergency Fund
Given:- Starting balance: $10,000
- Monthly contribution: $500
- HYSA APY: 4.25%
- Time horizon: 5 years
- Federal bracket: 22%
- State tax: 5% (e.g., MA)
- Comparison: traditional savings 0.40% APY
Steps:- Monthly rate r/12 = 0.0425 / 12 = 0.003542
- Periods n = 5 x 12 = 60
- (1 + r/12)^60 = (1.003542)^60 = 1.2362
- FV of starting: $10,000 x 1.2362 = $12,362
- FV of contributions: $500 x (1.2362 - 1) / 0.003542 = $500 x 66.66 = $33,329
- Total balance: $12,362 + $33,329 = $45,691
- Total contributed: $10,000 + ($500 x 60) = $40,000
- Total interest: $45,691 - $40,000 = $5,691
- After-tax interest at 27% combined rate: $5,691 x 0.73 = $4,154
- Traditional savings would yield ~$815 interest over 5 years - HYSA advantage: ~$4,876 more
Result: $45,691 final balance, $5,691 gross interest ($4,154 after tax). HYSA earns nearly 7x more interest than the FDIC national-average savings account.
❓ Frequently asked questions
What is a High-Yield Savings Account (HYSA)?
An HYSA is an FDIC-insured deposit account paying significantly higher interest than a traditional brick-and-mortar savings account. As of May 2026, top US online banks (Ally, Marcus, Discover, SoFi, Wealthfront, CIT) pay 4.0-4.5% APY versus the FDIC national average of about 0.40% for traditional savings - roughly 10x more. Most HYSAs have no minimum balance, no monthly fees, and full FDIC insurance up to $250,000 per depositor per bank.
Is HYSA interest taxable?
Yes. Interest in an HYSA is taxed as ordinary income at your marginal federal rate, plus state tax where applicable. Your bank sends a 1099-INT in January for any account that earned $10 or more in interest. For tax-free growth on long-term money, use a Roth IRA or HSA instead. HYSAs are best for emergency funds and short-term savings (1-3 years out) where liquidity matters more than tax efficiency.
HYSA vs CD vs money market - which is best?
HYSA: variable rate, fully liquid, ideal for emergency funds. CD: fixed rate, locked term (3 months to 5 years), early withdrawal penalty. Money market: variable rate (often slightly lower than HYSA), may include check-writing privileges. T-Bills: variable rate set at auction, state-tax exempt, full liquidity at 4-, 8-, 13-, 26-week maturities. For most savers, HYSA wins for the emergency-fund use case; T-Bills are a strong alternative if you live in a high-tax state (CA, NY, NJ).
Are HYSAs safe? What happens if the bank fails?
Very safe. HYSAs at FDIC-insured banks are protected up to $250,000 per depositor per bank for each account ownership category (individual, joint, retirement, trust). If the bank fails, the FDIC typically reimburses within a few business days. Online banks (Ally, Marcus, etc.) carry the same federal insurance as traditional banks. The only risk is the bank dropping the APY - which they can do at any time without notice.
Should I open multiple HYSAs to chase the highest APY?
Generally no. The headline-APY race churns - the highest rate today often drops in 6-12 months. Each new account creates a hard pull on your credit (sometimes), 1099-INT paperwork at tax time, and account management overhead. Pick one reputable HYSA with consistent top-quartile rates (Ally, Marcus, Wealthfront have stayed competitive for years) and move only if your bank drops 50+ basis points below the market.
📚 Sources & references
Last updated: May 13, 2026