📈 APY Calculator

APY vs APR Comparison by Compounding Frequency

For the same 5% nominal annual rate, more frequent compounding produces a higher APY. This table shows how the effective yield grows as the compounding frequency increases.

Note: Values calculated using APY = (1 + r/n)^n − 1. The gap between annual and continuous compounding at a 5% rate is about 0.13 percentage points.

Typical Savings Account APY by Type

Different deposit products offer very different yields. Online banks and credit unions typically pay more than traditional brick-and-mortar banks because of lower overhead.

Note: Rates reflect US averages and fluctuate with Federal Reserve policy. Always confirm the current APY with the institution before opening an account.

1. Enter the principal amount you are depositing or investing.
2. Enter the nominal annual interest rate as a percentage.
3. Choose or enter the number of compounding periods per year.
4. Click Calculate to see the APY, final balance and interest earned.
5. Try different compounding frequencies to see how they affect your yield.

What is the difference between APR and APY?

APR (Annual Percentage Rate) measures the cost of borrowing and typically does not account for compounding, so it is used for loans. APY (Annual Percentage Yield) measures the return on savings and investments and does account for compounding, so it is used for deposits. The difference is whether compounding works against you (borrowing) or for you (saving).

How does compounding frequency affect the APY?

The more frequently interest is compounded, the higher the APY. Daily compounding gives a slightly higher yield than monthly, which gives a slightly higher yield than annual. The difference is usually small — often a fraction of a percent — but it adds up over many years and large balances.

What compounding period should I choose?

It depends on the account. Most savings accounts compound daily or monthly. Certificates of deposit (CDs) often compound daily. Money market accounts may compound monthly. Check your account terms or statement to find out, then match the setting in the calculator for an accurate result.

Is APY guaranteed?

Only for fixed-rate products like CDs. For variable-rate accounts such as standard savings or money market accounts, the APY can change at any time. The calculator shows you the APY at the current rate, but you should re-check periodically if your rate is variable.

This tool is for informational purposes only and does not constitute financial advice. Consult a qualified financial professional for advice specific to your situation.

When shopping for a savings account or CD, always compare APYs rather than nominal rates, because the APY is the only number that accounts for compounding and lets you do a fair comparison. A seemingly small difference matters: over 20 years, a 0.5 percent higher APY on a 50,000-dollar balance adds more than 5,000 dollars in extra interest. Online banks and credit unions often offer significantly higher APYs than traditional brick-and-mortar banks because they have lower overhead, so it is worth checking rates beyond your primary bank. If you are choosing between a higher rate with less frequent compounding and a lower rate with more frequent compounding, the APY settles the question instantly. For long-term wealth building, the combination of a competitive APY and regular contributions is far more powerful than chasing the absolute highest rate, so do not neglect the habit of saving while you shop for yield.