APY Calculator
Find the annual percentage yield (APY) of a savings account or CD. Enter the interest rate and how often it compounds to see the real yearly return, plus the interest a deposit earns in one year.
APY
5.116%
Check the highlighted fields to see your result.
- Interest in 1 year
- 511.62
- Balance after 1 year
- 10,511.62
Results are estimates for information only and do not constitute financial, medical, or legal advice.
How APY works
When interest is compounded, each payment of interest is added to your balance and starts earning interest too. APY shows the total return over one year with that effect included, so it is the best number for comparing accounts.
The formula
APY = (1 + r ÷ n)n − 1
r is the yearly rate as a decimal and n is the number of times interest is compounded per year. For continuous compounding, APY = er − 1.
Worked example
A savings account pays 5% compounded monthly, and you deposit $10,000.
- APY = (1 + 0.05 ÷ 12)12 − 1 = 0.05116, or 5.116%.
- Interest in one year: $10,000 × 0.05116 = $511.62.
Frequently asked questions
What's the difference between APY and APR?
APR (annual percentage rate) is the simple yearly rate, without compounding. APY (annual percentage yield) includes the effect of earning interest on your interest during the year, so it is higher whenever interest is compounded more than once a year.
Why do banks advertise APY on savings accounts?
In the US, the Truth in Savings Act requires banks to show the APY on deposit accounts, so you can compare accounts that compound differently. For loans, lenders usually show the APR instead.
Does daily compounding make a big difference?
Less than you might think. At 5%, monthly compounding gives an APY of 5.116% and daily compounding gives 5.127%. The rate itself matters much more than how often it compounds.
Is the APY guaranteed?
Only if the rate is fixed, as with most certificates of deposit. Savings accounts usually have variable rates, so the APY can change at any time.