Savings Interest Calculator

How savings interest works

Choose simple or compound interest, then enter your deposit amount, the interest rate and the term. The calculator shows the interest you will earn, your ending balance and the effective APY.

Formulae

• Simple interest: interest = principal × rate × years.
• Compound interest: ending balance = principal × (1 + r ÷ n)^{n × years}.
• APY: (1 + r ÷ n)ⁿ − 1.

Rates change over time and vary by provider — confirm the current rate and terms before you apply. Holding the balance in a TFSA keeps the interest tax-free, while an RRSP defers tax until withdrawal. GICs may lock in your funds until maturity.

Frequently Asked Questions

What is the difference between the nominal rate and APY?

The nominal rate is the stated annual rate before compounding. APY (annual percentage yield) shows what you actually earn over a year once compounding is taken into account, so it lets you compare accounts on a like-for-like basis.

How is APY calculated?

APY = (1 + r ÷ n)ⁿ − 1, where r is the nominal annual rate and n is the number of compounding periods per year. Monthly compounding gives a slightly higher APY than annual interest.

Is savings interest taxable in Canada?

Interest earned in a non-registered account is fully taxable at your marginal rate. Interest earned inside a TFSA is completely tax-free, and interest inside an RRSP is tax-deferred until you withdraw the funds.

What is a TFSA?

A Tax-Free Savings Account is a registered account where interest, dividends and capital gains grow tax-free and withdrawals are never taxed. You can contribute up to your annual TFSA limit each year, and unused room carries forward.

Simple vs. compound interest — which do banks use?

Most savings accounts and GICs compound interest (often monthly, semi-annually or annually). Simple interest, paid only on the original deposit, is less common but useful for comparison.