How Daily Compounding with Daily Cash Works
Unlike traditional monthly savings deposits, features like Apple Card Savings combine daily cash-back sweeps with daily interest accrual. Each day, cash-back rewards enter the account and immediately begin accruing interest at the effective daily rate.
Even a 0.10% APY boost (such as moving from 3.4% to 3.5%) accelerates over multi-year horizons as interest compounds upon previously accrued interest and newly swept deposits.
Frequently Asked Questions
What is the difference between APR and APY?
Annual Percentage Rate (APR) reflects the simple interest rate over a year without compounding. Annual Percentage Yield (APY) takes compounding into account. When a bank quotes a 3.5% APY with daily compounding, the nominal daily rate is (1 + 0.035)^(1/365) - 1.
How are 1099-INT savings taxes handled?
Interest earned on high-yield savings accounts is taxable as ordinary income in the year received by the IRS and most state tax authorities. This tool computes both gross earnings and net after-tax yield based on your selected tax bracket.
Can I simulate other high-yield accounts?
Yes. Simply adjust the baseline and active APY fields to test any banking institution, certificate of deposit (CD), or treasury bill yield against your savings goal.