Interest posts to your account on a schedule set by your bank, usually monthly or daily

Your bank calculates interest on your savings balance and deposits it into your account at intervals it chooses. Most banks post interest monthly, though some post quarterly or annually. A smaller number of banks compound and post interest daily, which means you earn interest on the interest you've already earned. The frequency matters because daily compounding grows your money faster than monthly compounding at the same stated rate.

The bank's disclosure documents—usually called the Truth in Savings Act disclosure or deposit agreement—tell you exactly when interest posts. You can find this on the bank's website or ask a teller to show you. The stated interest rate (called the APY, or annual percentage yield) already accounts for how often the bank compounds, so you don't need to do math to compare banks fairly. A 4.50% APY at one bank will earn you the same amount over a year as a 4.50% APY at another bank, regardless of whether one compounds daily and the other compounds monthly.

Key Takeaways

  • Most banks post interest monthly, though some post daily, quarterly, or annually—check your deposit agreement to know your bank's schedule.
  • The APY (annual percentage yield) shown on the bank's website already reflects how often interest compounds, so you can compare rates between banks directly.
  • Daily compounding grows your balance slightly faster than monthly compounding, but only if the stated APY is the same.
  • Interest stops accruing the moment you close the account, and some banks do not pay accrued interest if you close before the posting date.

Why the posting schedule matters less than you think

A reader's first instinct is often to hunt for the bank that posts interest most frequently. In practice, this matters far less than the APY itself. A bank offering 4.00% APY compounded daily will earn you less money than a bank offering 4.25% APY compounded monthly, even though the first bank posts more often. The APY is the number that already includes the effect of compounding frequency, so it's the only number you need to compare.

Where posting frequency does matter is in how quickly you see the money in your account. If you post interest monthly and you're watching your balance grow, you'll see deposits once a month. If you post daily, you'll see tiny additions every day. Neither approach changes how much you earn over a year—the APY ensures that. But if you're moving money out of the account soon, daily posting means you might catch an extra few cents before you withdraw.

What happens to interest if you close your account early

If you close a savings account before the interest posting date, you may not receive the interest that has accrued since the last posting. This depends entirely on the bank's policy. Some banks pay accrued interest even if you close early; others do not. A few banks have a minimum holding period—for example, you must keep the account open for 30 days to earn any interest at all.

Before you open a savings account, ask the bank directly: "If I close this account before the next interest posting date, do I get the interest I've earned so far?" The answer should be in the deposit agreement, but a phone call to customer service is faster. If the bank won't pay accrued interest and you're planning to move the money within a month, that policy could cost you real dollars.

How interest rates change between posting dates

Banks can change the APY on a savings account at any time, and the new rate takes effect on the next interest posting date. If your bank lowers rates, the lower rate applies to the next interest deposit. If your bank raises rates—which happens rarely—the higher rate applies to the next deposit. You won't see a retroactive adjustment to interest you've already earned.

This is why it's worth checking your bank's current rates every few months, especially if you have a large balance. If rates have dropped significantly and other banks are offering more, moving your money to a higher-rate account could earn you hundreds of dollars a year. The interest you've already earned stays in your account; you're only comparing the rate going forward.

The difference between stated rate and APY

Banks sometimes advertise a "stated rate" and an "APY" as two separate numbers. The stated rate is the interest rate before compounding is factored in. The APY is the rate after compounding—it's the actual percentage you'll earn over a year. Federal law requires banks to show you the APY prominently, because that's the number that matters for comparison.

For example, a bank might offer a 4.00% stated rate compounded daily. When you factor in daily compounding, the actual APY might be 4.08%. That 0.08% difference is small, but on a $10,000 balance it's about $8 a year. Always use the APY when comparing accounts, not the stated rate. The APY is what you'll actually earn.

How to track interest deposits in your account

Most banks show interest deposits in your transaction history or account statement. You can usually see the exact date each interest payment posted and the amount. If you log into online banking, look for a statement or transaction list; the interest deposit will appear as a credit with a label like "Interest Paid" or "Interest Deposit." Some banks also show a running total of interest earned year-to-date on the account summary page.

If you don't see interest posted on the date you expected, check your deposit agreement again—the posting date might be the last business day of the month, not the calendar date. If interest still hasn't appeared after that date, contact the bank. Interest posting failures are rare, but they do happen, and the bank can investigate and correct it.

Frequently Asked Questions

Can I move my money to a different bank without losing accrued interest?

Yes. Interest you've already earned belongs to you. When you close the account, the bank will either pay accrued interest into the account before closing it (so you can withdraw it) or pay it directly to your new bank during the transfer. Ask your current bank what their policy is before you initiate the move.

Does interest compound on top of itself?

Yes, if your bank compounds daily or monthly. Each time interest posts, the next interest calculation includes the interest you've already earned. This is called compound interest. Over time, compounding makes your balance grow faster than straightforward interest would. The APY already reflects this compounding, so you don't need to calculate it yourself.

What if my bank hasn't posted interest in two months?

Contact the bank when ready. Interest posting delays are unusual. The bank may have a system error, or there may be a hold on your account you're not aware of. Ask to speak with someone in the savings department who can review your account and confirm when interest was last posted and when the next posting is due.

Is there a minimum balance I need to earn interest?

That depends on the bank. Some banks require a minimum balance to earn any interest at all—often $500 or $1,000. Others have no minimum. Check the deposit agreement or ask the bank before you open the account. If you fall below the minimum, the bank may stop paying interest until your balance rises again.