$200 a month for five years is $12,000. The rate decides whether interest adds $149 or $1,260

Put $200 a month into a savings account for five years and you will have paid in $12,000. What the account adds on top depends almost entirely on the rate. At 0.5% it adds $149. At 4% it adds $1,260.

Five years of $200 a month

Both rates are round examples held the same for the whole five years, which no real savings rate is. The sums come from the savings calculator, with the money added at the end of each month.

At 4% the balance after five years is $13,259.80. Of that, $12,000 is money you put there yourself.

Why the first year looks like nothing

After twelve months at 4% the interest is $44.49 on $2,400 paid in. That is under 2% of what went in, on an account paying 4%. Nothing is wrong. The first deposit earned interest for eleven months and the last one for none, so on average the money was only there for half the year.

This is why regular saving feels slow at the start. Early on, nearly all of the balance is your own deposits. The interest only becomes noticeable once there is a balance for it to be charged on.

Ten years

Keep going for ten years and the paid-in total doubles to $24,000. The interest does more than double:

Twice the time gave more than four times the interest at 4%, because the second five years start with a balance already in place.

What this leaves out

• The rate will move. Savings rates rise and fall with the wider economy, and a bank can change its own at any time.
• Tax on the interest. It is income, and what you keep depends on your own position.
• Rising prices. $13,260 in five years will buy less than $13,260 does today.

Change the monthly amount, the years and the rate to your own in the savings calculator. An estimate, not financial advice.