APY Calculator
Convert an interest rate to APY and see what a deposit earns with daily, monthly, quarterly or annual compounding.
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Convert a stated rate to APY and see the interest a deposit earns.
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How APY is calculated
APY (annual percentage yield) is the interest you earn in a year once compounding is included. The stated rate (APR) ignores compounding; APY includes it. The formula is APY = (1 + r ÷ n)n − 1, where r is the stated annual rate as a decimal and n is the number of times interest compounds per year. The more often it compounds, the higher the APY for the same stated rate.
Examples
| Stated rate | Compounding | APY |
|---|---|---|
| 1% | Daily | 1.005% |
| 2% | Daily | 2.020% |
| 4% | Daily | 4.081% |
| 4.5% | Daily | 4.602% |
| 5% | Daily | 5.127% |
| 5% | Monthly | 5.116% |
APY vs APR
- For savings, CDs and money market accounts, compare APY: it shows what you actually earn in a year.
- For loans and credit cards, lenders quote APR; the real cost is higher when interest compounds, so compare carefully.
- Rates on savings products can change over time, so check your bank for the current rate.
This is an estimate for a fixed rate with no deposits or withdrawals and not financial advice. See also the compound interest calculator and the CD calculator.
How to use the APY calculator
- Enter the stated interest rate and choose how often it compounds.
- Optionally enter a deposit amount and a number of years.
- Read the APY and, with a deposit, the final balance and interest earned.
Frequently asked questions
How do I calculate APY from an interest rate?
Use APY = (1 + r ÷ n)^n − 1, where r is the stated rate and n is the compounding periods per year. A 4.5% rate compounded daily gives an APY of about 4.602%.
What is the difference between APR and APY?
APR is the stated annual rate without compounding. APY includes compounding, so it is equal to or higher than APR for the same account.
How much interest does $10,000 earn at 4.5% APR compounded daily?
After one year the balance is about 10,460.25 dollars, so the interest earned is about 460.25 dollars.
Does compounding frequency matter?
Yes, but the difference is small at modest rates. Daily compounding gives a slightly higher APY than monthly or annual compounding for the same stated rate.
Is APY the same for every account?
No. Banks set their own rates, and they can change. Compare the current APY at each bank before opening an account.
Related tools: Compound interest calculator · CD calculator · Monthly savings calculator