Calculate the Annual Percentage Yield (APY) to see the true return on savings accounts and investments with compound interest
Optional. APY is a property of the rate, so leave these blank to compare rates alone.
Estimates only. A bank's published APY assumes the balance stays put for a year; withdrawals, tiered rates and promotional periods all change what you actually earn.
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Banks advertise interest rates, but APY tells the real story. Annual Percentage Yield accounts for compound interest, showing exactly how much your money will grow. Our calculator compares different compounding frequencies so you can maximize your returns and make smarter savings decisions.
APY (Annual Percentage Yield) is the actual rate of return earned on an investment, taking compound interest into account. A 5% annual rate compounded monthly yields about 5.12% APY because you earn interest on your interest. The more frequent the compounding, the higher the APY for the same nominal rate.
APY Formula
Compare high-yield savings accounts by their true APY to maximize returns.
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APR is simple interest without compounding. APY includes compound interest effects. For savings, APY is higher than the stated rate. For loans, APR may exclude fees. Always compare APY to APY and APR to APR.
More frequent compounding means higher APY. Daily compounding beats monthly, which beats quarterly. At 5% nominal: annual = 5.00% APY, monthly = 5.12% APY, daily = 5.13% APY.
Banks must disclose APY by law so consumers can compare fairly. The nominal rate tells you the base rate; APY shows the actual return. High-yield savings accounts emphasize APY because it's more attractive.
Continuous compounding is the mathematical limit but only marginally better than daily. At 5%: daily = 5.1267% APY, continuous = 5.1271% APY. The difference is negligible for practical purposes.