All the deposit savings accounts offered by Huntington provide compound interest as an account benefit, which can mean additional earnings added into your savings account.
What is Compound Interest?
The details of how compound interest works will vary from bank to bank and account to account. To properly leverage your savings, it’s helpful to understand how compound interest works.
Savings accounts earn APY. APY stands for Annual Percentage Yield. “Annual” means yearly, and “percentage yield” is the actual percentage used to calculate the interest.
At Huntington, we divide the APY by the number of days in the year and compute the interest at a daily rate. So, your interest is being calculated for you every day. Next, the interest is compounded (added together) and deposited (minus any tax withholding if that applies to you) into your account every quarter for savings accounts and every month for money market and interest-bearing checking accounts.
When interest is compounded it means that you earn interest on your initial deposit, any additional deposits that you’ve made, and any interest that you have earned, assuming you haven’t withdrawn any money. This happens cycle after cycle as long as your account is in good standing and you meet the minimum balance to earn interest.
Savings accounts require a minimum balance to earn interest. Our Premier Savings Account has the lowest required balance of at least one cent to earn interest. Our Relationship Money Market Account earns a more competitive interest rate and requires a balance of $25,000.
You don’t earn interest if your balance is below the threshold. If you’re over the threshold, the entire balance is included in the calculations. Accordingly, if you have a Relationship Money Market account and your balance drops below $25,000, you’re not earning interest. If your balance is $25,001, then you’re earning interest on $25,001, not just the $1.
Compound Interest & High Interest Savings Accounts
The interest rate is how much your money earns. The higher the interest rate, the more you can earn. We have a savings interest rate calculator to help you compare interest rates and see how a change in interest can affect your potential earnings.
If you have a variable APY, then the interest rate may change at any time. CDs (certificates of deposit) have a guaranteed interest rate during the period you own the CD, but the interest rates offered for new CDs may change. This is why it’s important to take an active role in your savings. Periodically review our savings account options to learn what we offer and talk to us so we can help you identify the best account for your needs.
How to Make the Most of Your Compound Interest Savings Account
Whether you start out with a balance of $100 or $25,000, it still takes time to grow your money.
Since compound interest builds over time, the real progress happens when you combine saving early with saving often.
We offer two savings tools to help you maximize your savings. You can schedule recurring transfers from your checking account to your savings account.