How interest is calculated can have a great impact on the interest earned by your account and how your savings grow. When interest is compounded, the interest earned on the account is added to the principal balance on which interest will be calculated in the future, which means you’ll earn interest on previously earned interest. You'll see your account balance grow more quickly with accounts that compound interest more frequently. The "Annual Percentage Yield" or APY is the effective annual rate of return once the effect of compounding interest is factored in.
Use this calculator to calculate compound interest.