How to use the APY Calculator
- Enter the stated interest rate (APR) of the account.
- Choose how often interest is compounded: daily, monthly, quarterly, half-yearly or yearly.
- Enter your deposit to see the interest and balance after one year.
- Compare the APY with other accounts. A higher APY always means a higher return over a year.
Formula used
APY = (1 + r ÷ n)ⁿ − 1, where r is the stated yearly rate as a decimal and n is the number of compounding periods per year.
Worked example
Here is the APY Calculator worked through with the example values shown above, so you can check each step by hand.
| Inputs | |
|---|---|
| Stated interest rate (APR) | 5 % |
| Compounding | Daily |
| Deposit | $10,000 |
| Result | |
| APY | 5.13% |
| Interest after one year | $512.67 |
| Balance after one year | $10,512.67 |
APY at different stated rates
With the default daily compounding and deposit.
| Stated interest rate (APR) | APY | Interest after one year |
|---|---|---|
| 1 % | 1.01% | $100.50 |
| 3 % | 3.05% | $304.53 |
| 5 % | 5.13% | $512.67 |
| 7 % | 7.25% | $725.01 |
| 10 % | 10.52% | $1,051.56 |
APR versus APY
APR is the nominal yearly rate before compounding. APY adds the effect of earning interest on interest. The formula is APY = (1 + r ÷ n)ⁿ − 1, where r is the yearly rate and n is the number of compounding periods per year. A 5% rate compounded daily gives an APY of 5.127%, so a $10,000 deposit earns $512.67 in a year and grows to $10,512.67.
If the same 5% were compounded only once a year, the APY would equal the APR, 5%, and the interest would be $500.00. The difference of $12.67 comes only from more frequent compounding.
How compounding frequency changes the yield
For a 5% stated rate, the APY is 5% with yearly compounding, 5.062% half-yearly, 5.095% quarterly, 5.116% monthly and 5.127% daily. More frequent compounding always helps, but the gains get smaller each time: going from monthly to daily adds very little.
At higher rates the effect is larger. A 10% rate compounded daily has an APY of 10.52%, which is more than half a percentage point above the stated rate.
Which number should you compare?
When you compare savings accounts, certificates of deposit and other deposits, compare APY, because it puts them on the same one-year basis. When you compare loans, lenders often quote APR instead, which includes some fees, so APR is the more useful figure for borrowing.
Remember that a high APY can come with conditions, such as a minimum balance, a limited promotional period or a variable rate that can fall. Read the terms before you move money.
Using the result
The interest figure on this page covers a single year with no deposits or withdrawals. To plan over many years, or to include monthly contributions, use the compound interest, savings goal or SIP-style calculators elsewhere on this site.
Interest may be taxable, which lowers your effective return. Check how your country or state treats savings interest.
Frequently asked questions
What is APY?
The annual percentage yield is the real return you earn in a year after compounding. It is always at least as high as the stated rate.
What is the difference between APR and APY?
APR is the stated rate without compounding. APY includes compounding, so it is higher whenever interest is compounded more than once a year.
Which should I compare when choosing a savings account?
Compare APY, because it shows the real yearly return on equal terms.
How do I convert APR to APY?
Use APY = (1 + APR ÷ n)ⁿ − 1, where n is the number of times interest is compounded per year.
Does daily compounding make a big difference?
Compared with monthly compounding, only a small one. The jump from yearly to monthly compounding is larger.
Are the results guaranteed?
Only if the rate is fixed. Many savings accounts have variable rates that can change at any time.
This calculator gives estimates for information only. Actual figures from a bank, employer, tax authority or doctor may differ. It is not financial, tax, legal or medical advice.