APY Calculator

Use this free APY calculator to convert an interest rate (APR) into its annual percentage yield (APY), or turn an APY back into the equivalent APR. Enter a deposit amount to see how much interest a savings account, money market account, or CD could earn over time.

How to Use This APY Calculator

1. Pick a direction. Choose APR to APY if you know the nominal rate and want the yield. Choose APY to APR if a bank advertises an APY and you want the underlying rate.
2. Enter the rate. Type it as a percentage (for example, 4.5 for 4.5%) or drag the slider.
3. Select the compounding frequency. Most U.S. savings accounts compound daily or monthly. Check the account’s disclosure if you’re not sure.
4. Add a deposit and a time period (optional). The calculator shows interest earned, your ending balance, and how much extra compounding adds compared with simple interest.

Open Compare every compounding schedule to see how the same rate performs when interest is added daily, monthly, quarterly, twice a year, yearly, or continuously.

What Is APY?

Annual percentage yield (APY) is the total return you earn on a deposit in one year, including the effect of compounding. Compounding means the interest you’ve already earned starts earning interest too.

APR, or the stated interest rate, ignores compounding. That’s why APY is always equal to or higher than the APR on the same account. The two numbers are identical only when interest compounds once a year.

Because APY reflects how often interest is paid, it is the better number for comparing savings accounts, money market accounts, and certificates of deposit (CDs) from different banks and credit unions.

APY Formula

To convert APR to APY, the calculator uses the standard compound interest formula:

APY = (1 + r / n)n − 1

• r = the annual interest rate (APR) as a decimal, so 5% = 0.05
• n = the number of compounding periods per year (365 for daily, 12 for monthly, 4 for quarterly)

For continuous compounding, the formula becomes APY = e^r − 1, where e is about 2.71828.

To go the other way and convert APY to APR, the calculator reverses the formula:

APR = n × [(1 + APY)1/n − 1]

APY Calculation Examples

Example 1: 5% APR compounded daily

A high-yield savings account pays 5.00% APR, compounded daily.

APY = (1 + 0.05 / 365)³⁶⁵ − 1 = 5.127%

On a $25,000 balance, that’s about $1,281.69 in interest after one year, compared with $1,250.00 if interest were paid only once a year.

Example 2: How much does $10,000 earn at 4.50% APY?

Because APY already includes compounding, one year of interest is simply the balance times the APY: $10,000 × 0.045 = $450.00.

If you leave the money untouched for five years at the same rate, the balance grows to $10,000 × (1.045)⁵ = $12,461.82, or $2,461.82 in interest.

Example 3: Convert 4.50% APY to APR

A bank advertises 4.50% APY, compounded monthly. The equivalent APR is 12 × [(1.045)^1/12 − 1] = 4.410%. If the same APY were compounded daily, the APR would be slightly lower, at 4.402%.

How Compounding Frequency Changes APY

The more often interest compounds, the higher the APY. Here’s what a 5.00% APR becomes at each frequency:

Compounding frequency	Periods per year	APY at 5.00% APR
Annually	1	5.000%
Semiannually	2	5.063%
Quarterly	4	5.095%
Monthly	12	5.116%
Daily	365	5.127%
Continuously	—	5.127%

Notice that the gains shrink as compounding gets more frequent. Moving from annual to monthly compounding adds about 0.12 percentage points, but moving from daily to continuous adds almost nothing. In practice, the rate itself matters far more than the compounding schedule.

APY vs. APR: What’s the Difference?

	APY	APR
Includes compounding?	Yes	No
Where you’ll see it	Savings accounts, money market accounts, CDs	Loans and credit cards
Which is higher?	Equal to or higher than APR	Equal to or lower than APY
Best use	Comparing what deposits earn	Comparing what borrowing costs

One caution: on a loan, APR can include certain fees on top of interest, so a loan’s APR and its interest rate aren’t always the same number. When you’re saving, look at APY. When you’re borrowing, look at APR.

Why U.S. Banks Must Show APY

Under the federal Truth in Savings Act and its implementing rule, Regulation DD, banks must disclose the APY on interest-bearing deposit accounts so consumers can compare accounts on equal terms. Credit unions follow a parallel rule from the NCUA. This is why you’ll see “APY” next to nearly every savings and CD rate in the U.S.

What APY Doesn’t Tell You

• Variable rates can change. Savings and money market APYs can go up or down at any time. A CD’s APY is usually locked for the term.
• Fees and minimums reduce real returns. A monthly maintenance fee or a minimum balance requirement can wipe out part of your interest.
• Promotional rates expire. Check how long an introductory APY lasts and what the rate drops to afterward.
• Interest is taxable. Interest from bank accounts is generally taxable income. Banks typically send Form 1099-INT if you earn $10 or more in a year.
• Insurance limits apply. FDIC insurance (banks) and NCUA insurance (credit unions) cover up to $250,000 per depositor, per insured institution, for each account ownership category.

Frequently Asked Questions

Is a higher APY always better?

For deposits, a higher APY means more interest, but also compare fees, minimum balance rules, withdrawal limits, and whether the rate is fixed or variable.

How do I calculate monthly interest from APY?

Monthly growth = (1 + APY)^1/12 − 1. At 4.50% APY, that’s about 0.367% per month, or roughly $36.75 on a $10,000 balance in the first month.

Can APY and APR be the same?

Yes. When interest compounds once a year, the APY equals the APR. Any compounding more often than once a year pushes the APY above the APR.

Does daily compounding make a big difference?

Compared with monthly compounding, not much. At 5.00% APR, daily compounding produces a 5.127% APY versus 5.116% for monthly. That’s about $1 more per year on every $10,000.

What is a good APY for a savings account?

It depends on the current rate environment, which changes with Federal Reserve policy. A useful benchmark is the national average savings rate the FDIC publishes each month. High-yield online accounts often pay well above that average.

Sources

• Consumer Financial Protection Bureau: Regulation DD (Truth in Savings), 12 CFR Part 1030
• FDIC: Understanding Deposit Insurance
• FDIC: National Rates and Rate Caps
• NCUA: Share Insurance Coverage
• IRS: Topic No. 403, Interest Received

This calculator provides estimates for educational purposes only and is not financial, tax, or investment advice. Actual returns depend on your account terms, rate changes, fees, and taxes. Last updated: October 12, 2026.