APY Calculator
Banks quote an APR; your money earns the APY — the rate after compounding kicks in. Convert one to the other, see what a deposit really earns, and compare compounding frequencies side by side.
▸ Compare compounding frequencies
| Compounded | APY | Year-1 interest on $10,000 |
|---|
Estimates are for illustration and education only — not financial advice. Rates are assumed constant; banks may change rates at any time.
APR vs. APY, in plain terms
APR (annual percentage rate) is the flat quoted rate. APY (annual percentage yield) is what you actually earn once interest starts earning interest within the year. The formula: APY = (1 + APR ÷ n)n − 1, where n is how many times per year interest is credited. More frequent compounding → higher APY, from the same APR.
How big is the difference, really?
Smaller than the marketing suggests. A 4.5% APR compounded monthly gives 4.594% APY; daily compounding lifts it to just 4.603%. The frequency table above makes this concrete — going from annual to monthly matters a little, monthly to daily barely at all. What matters far more is the rate itself and how long you leave the money in.
Reading bank offers correctly
US banks must advertise savings products by APY, so you can compare offers directly — a 4.60% APY beats a 4.55% APY regardless of compounding. Loans work the other way: they're quoted as APR, and the effective rate you pay is higher once compounding is counted. Same math, opposite direction.
Keep going
APY tells you the yield for one year — the compound interest calculator shows what it builds over decades with contributions, and the rule of 72 turns any APY into a doubling time you can do in your head.
APR → APY at a glance
Effective annual yield for common advertised rates, by compounding frequency.
| APR | Quarterly | Monthly | Daily |
|---|---|---|---|
| 1% | 1.004% | 1.005% | 1.005% |
| 3% | 3.034% | 3.042% | 3.045% |
| 4.5% | 4.577% | 4.594% | 4.603% |
| 6% | 6.136% | 6.168% | 6.183% |
| 8% | 8.243% | 8.300% | 8.328% |
Rounded to three decimals; assumes interest is credited and retained all year.
The APY formula
APY (annual percentage yield) turns a nominal rate plus a compounding frequency into the true yearly return — the number that lets you compare accounts fairly.