APY Calculator
Calculate the Annual Percentage Yield (APY) for savings accounts and investments.
See how compounding frequency affects your actual returns.
APY Formula:
APY = (1 + r/n)^n - 1
Where:
- r = the nominal (stated) annual interest rate, expressed as a decimal (e.g., 5% = 0.05)
- n = the number of times interest compounds per year
What is compounding? Compounding means you earn interest on your interest. Each time interest is calculated, it gets added to your balance. The next calculation then uses that larger balance. The more often this happens, the more you earn.
Compounding frequencies:
| Frequency | n value | How Often |
|---|---|---|
| Annually | 1 | Once per year |
| Semi-annually | 2 | Every 6 months |
| Quarterly | 4 | Every 3 months |
| Monthly | 12 | Every month |
| Daily | 365 | Every day |
APY vs APR, and how they differ
- APY (Annual Percentage Yield) is the effective rate you EARN on savings and deposits. It includes compounding.
- APR (Annual Percentage Rate) is the rate you PAY on loans and credit cards. It is a nominal rate, so it does not include the effect of compounding, though it does include fees.
The two answer different questions, which is why the same underlying rate can be quoted both ways. A savings product advertises the APY because compounding makes it the larger number. A loan advertises the APR for the mirror-image reason.
When comparing savings accounts, compare APY rather than the nominal rate, because APY is the only figure that accounts for compounding differences between them.
Practical Example: A savings account offers 5.00% interest compounded daily. APY = (1 + 0.05/365)^365 - 1 = 5.127% On a $10,000 deposit for 1 year: you earn $512.67 instead of $500.00. The extra $12.67 comes entirely from daily compounding.
After 5 years, $10,000 at 5% compounded daily grows to $12,840.03, against $12,500.00 with simple interest. That is $340.03 of extra earnings from compounding alone.
Tips:
- High-yield savings accounts usually compound daily, which is what pushes their APY above the stated rate
- The gap between compounding frequencies is small at low rates and grows with both the rate and the time period. At 1% it is almost irrelevant; at 5% over a decade it is real money
- CDs (Certificates of Deposit) compound at varying frequencies, so compare the APY rather than the stated rate
- Even 0.1% of APY matters on a large balance held for years, which is the whole argument for moving cash out of a big-bank savings account
How we build and check this calculator
This calculator runs entirely in your browser, so the numbers you enter stay on your device. The math behind it is written by hand and tested against worked examples and standard references before the page goes live.
SuperGlobalCalculator is independently built and maintained. See how we build and verify our calculators.