Your savings accounts can have one of two types of rates: simple interest, and compound interest. Simple interest pays a dividend into your account based on the initial balance at the beginning of the payment period. For example, a $1000 initial deposit that earns 1% per month (12% annual percentage rate or APR) would earn $10 the first month, $10 the second month, and so on. Interest rate calculations are based only on the saved amount. After 12 months, the account would have earned $120 in interest. In 8.3 years, the money would double to $2,000. However, simple interest is rarely used in today's financial transactions.

Compound interest is the best kind of rate for savings accounts. Compound interest pays you based on the total amount of money in your account, including interest. The $1000 initial deposit at 1% per month (12% APR) would earn 1% of $1000 the first month, or $10, for a total balance of $1010. It would earn 1% of $1010 or $10.10 the second month, for a balance of $1020.10. For the third month, it would earn 1% of $1020.10, or $10.20, for a new balance of $1030.30. After 12 months, the account would have earned $126.83 in interest. In only 6 years, the money would double to $2,000! It is clear that compound interest is the best rate for saving funds.

This is known as The Rule of 72, which is an estimate in years of how long it takes money to double using compound interest. Divide 72 by the annual interest rate, such as 72/12%, and the result is 6 years.

Certain high-yield investment accounts offer much higher yields on your savings than traditional personal accounts. These high-interest accounts are good for earning interest dividends of money you don't intend to use soon. To qualify for these high yield rates, you must deposit a minimum amount of money, which may be $5,000, $10,000 or even higher, depending on the financial institution. You may be required to maintain a certain account balance or risk losing the high rates. The amount of times you can access the account each month may be limited too. These high yield rates for investment accounts are for money that won't be used in the near future.

The internet makes it easy to compare savings account rates. Banks and credit unions will offer online banking services, including access to checking and savings accounts. They will post the amount of interest they pay for various accounts on their websites. Some banks exist totally on the internet, and can offer even higher rates of interest on your savings. That is because these online banks do not have the overhead associated with a large building, and can pass the savings on to you in the form of higher savings dividends.

You can estimate how much your money will multiply if you use a savings account calculator. Use your favorite search engine to find one. Enter the starting balance, the interest rate, and how long you expect to leave the money in the account. The calculator will estimate how much money you will have at the end of that period. Tools like these make comparing interest rates for savings account easy and fun.