How it works
A savings account has exactly two moving parts that matter: the APY it pays and the fee it charges. Everything else — branding, app, ATM network — is preference. This tool grows your starting balance and deposits at each account's APY, then subtracts every monthly fee, and shows which account holds more money at the end. APY already includes compounding, so two accounts at the same APY pay identically whether they compound daily or monthly; you do not need to adjust for it. The surprise for most people is how cheap a high APY is to beat with a fee. A $12 monthly maintenance fee is $144 a year, which erases the entire interest advantage of a 4.5% account over a 0.5% account until the balance passes about $3,600. The break-even balance line shows exactly that threshold: the point where the higher-APY account's extra interest covers its higher fee. Below it, the 'worse' APY with no fee is the better account. This is also the cleanest argument for online high-yield savings over a big-bank account with a fee waiver tied to a minimum balance — the waiver is just a fee you pay in foregone flexibility.
Formula
End balance = FV(balance + deposits, APY, years) - (monthly fee x 12 x years) | Break-even balance = annual fee gap / APY gap
Tips
- Treat a monthly fee as negative interest — $144 a year is the interest on $3,200 at 4.5%, gone.
- APY already includes compounding, so compare APY to APY directly regardless of how often each compounds.
- A fee waived by a minimum balance is still a fee; it just charges you in locked-up cash instead.
- Rates on high-yield accounts move with the Fed — re-check the comparison when rates shift, not just the fee.
- Keep emergency savings in the higher-APY account even if the checking convenience lives elsewhere.
Frequently asked questions
- Is a high-yield savings account worth switching banks for?
- Usually yes. The gap between a big-bank 0.5% and an online 4.5% APY is $400 a year on $10,000 — real money for an account that takes minutes to open and typically carries no fee or minimum.
- How do bank monthly fees compare to interest?
- Directly, dollar for dollar. A $10 monthly fee costs $120 a year; on a $5,000 balance that wipes out the first 2.4% of APY. Many people hold a 'free' account that quietly pays them less than nothing after the fee.
- Does it matter how often a savings account compounds?
- Not when you compare APY to APY. APY is the annual percentage yield — it already folds compounding in, so a 4.5% daily-compounding account and a 4.5% monthly-compounding account pay the same over a year.
- What is a good APY for a savings account?
- It tracks the federal funds rate, so 'good' moves. As a rule, a competitive high-yield account pays within about half a point of the prevailing rate; if yours pays under 1% while headline rates are near 4-5%, you are leaving hundreds of dollars a year on the table.
- Should my emergency fund be in a high-yield account?
- Yes. It is the ideal home — liquid, FDIC-insured, and paying 4%+ rather than near-zero in checking. The only requirement is that you can reach it within a day or two, which any savings account satisfies.