APY Calculator
APY shows the real return on savings after compounding. Compare savings accounts, CDs, and money market accounts on equal terms.
💰 Financial Disclaimer: This calculator is for educational purposes only. Consult a qualified financial professional.
How It Works
Enter your nominal (stated) rate and how often interest compounds. The calculator converts to APY so you can compare any savings products fairly.
Formula
APY = (1 + r/n)n − 1
r = nominal rate (decimal), n = compounding periods/year (365=daily, 12=monthly, 4=quarterly, 1=annual).
Example
Nominal 5%, monthly compounding:
APY = (1 + 0.05/12)12 − 1 = 5.116%
On $10,000: earns $511.60/year vs $500 simple interest.
When to Use This Calculator
Use when comparing savings accounts or CDs with different compounding frequencies. APY is the only fair comparison basis — lenders are required to disclose it.
Common Mistakes to Avoid
- Confusing APR with APY — APR ignores compounding effects.
- Assuming daily and monthly compounding are identical — daily is slightly better.
- Ignoring fees — a high APY with monthly fees may yield less than a fee-free lower-APY account.
Frequently Asked Questions
APR vs APY?
APR is the stated rate without compounding. APY includes compounding effects, showing your true annual return. Always compare APY for savings.
Which compounding is best?
Daily > Monthly > Quarterly > Annual for the same nominal rate.
At 5% APY, what does $10,000 earn?
$10,000 at 5% APY earns $500 in the first year, growing to $10,500.
Is higher APY always better?
Generally yes, but check minimum balances and fees that may offset the higher yield.
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Last Updated: July 4, 2026