BMO High Interest Savings Account Calculator

Compound Interest Formula:

\[ A = P \times \left(1 + \frac{r}{n}\right)^{n \times t} \]

Principal Amount (P):

Annual Interest Rate (r):

Compounds Per Year (n):

Time (t):

years

Future Value (A):

Total Interest Earned:

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1. What is Compound Interest?

Compound interest is interest calculated on the initial principal and also on the accumulated interest of previous periods. This "interest on interest" effect can cause wealth to grow exponentially over time, making it a powerful concept in savings and investing.

2. How the Calculator Works

The calculator uses the compound interest formula:

\[ A = P \times \left(1 + \frac{r}{n}\right)^{n \times t} \]

Where:

$ A $ — Future value of investment
$ P $ — Principal investment amount
$ r $ — Annual interest rate (decimal)
$ n $ — Number of times interest is compounded per year
$ t $ — Time the money is invested for (years)

Explanation: The more frequently interest is compounded, the greater the return on your savings. This calculator shows how small, regular contributions can grow significantly over time.

3. Benefits of High Interest Savings

Details: High interest savings accounts like BMO's offer better returns than regular savings accounts while keeping your money accessible. They're ideal for emergency funds or short-term savings goals.

4. Using the Calculator

Tips: Enter your principal amount, annual interest rate (without % sign), number of compounding periods per year (typically 12 for monthly), and investment period in years. Try different scenarios to see how rate and time affect your returns.

5. Frequently Asked Questions (FAQ)

Q1: How often is interest compounded in BMO savings accounts?
A: Most BMO high interest savings accounts compound interest daily and pay it monthly.

Q2: What's the difference between simple and compound interest?
A: Simple interest is calculated only on the principal amount, while compound interest is calculated on principal plus accumulated interest.

Q3: Are there limits on high interest savings accounts?
A: Some accounts may have minimum balance requirements or transaction limits to qualify for higher rates.

Q4: How does compound frequency affect returns?
A: More frequent compounding (daily vs. monthly) results in slightly higher returns due to the interest-on-interest effect.

Q5: Are these accounts insured?
A: Yes, BMO savings accounts are CDIC insured up to $100,000 per account category.