SAVINGS

APY Calculator

APY, or annual percentage yield, shows the real yearly return on a savings account after compound interest is included. Two accounts with the same headline interest rate can pay different amounts if they compound at different times. This calculator converts any interest rate and compounding frequency into APY, and shows what a deposit would grow to over your chosen term.

How to use this APY calculator

1. Enter the annual interest rate the bank quotes for the account. You will find it on the account page on the bank’s website, or in the rate sheet the bank gives you when you open the account.
2. Pick how often the interest compounds: daily, monthly, quarterly or annually. This is stated in the account terms. Daily is the most common for savings accounts.
3. Enter the initial deposit, the amount you plan to put in at the start.
4. Enter the term in years, meaning how long you plan to leave the money in the account.
5. Press Calculate. You will see the APY, the final balance after the term, and the total interest earned.

A worked example

Say you deposit $10,000 in a savings account paying 4.50% interest, compounded monthly, and you leave it there for 3 years.

The calculator converts that rate into an APY of 4.59%. Over the 3 years the deposit grows to $11,442.48, so the total interest earned is $1,442.48.

The compounding schedule only moves the result a little. The same 4.50% rate compounded daily would give an APY of 4.60%. That is why the interest rate itself, and any fees on the account, matter more than how often the interest is added.

The Federal Deposit Insurance Corporation explains how to compare bank accounts and deposit rates.

Related calculators

• Savings Goal Calculator: set a target amount and see the monthly saving you need to reach it.
• CD Ladder Calculator: split your savings across CDs that mature one year apart.
• CD Calculator: work out what a single certificate of deposit pays at maturity.
• Compound Interest Calculator: see how a lump sum or regular deposits grow with compound interest.

How this APY calculator works

APY includes the effect of compounding, while the plain interest rate, often called APR, does not. When interest is paid into your account, it then starts earning interest itself, so your money grows slightly faster than the headline rate alone suggests. APY captures that extra growth in a single percentage.

The more often interest compounds, the higher the APY for the same interest rate. Interest compounded daily builds a little faster than interest compounded monthly, which in turn beats quarterly or annual compounding. This calculator applies the standard formula: it divides the yearly rate by the number of compounding periods each year, works out the growth over a full year, and turns that growth into a percentage.

Banks in the US must quote APY on savings accounts, so savers can compare accounts fairly, on a like-for-like basis. That rule means you do not have to work out the compounding effect yourself when you shop around. Enter the rate from any account here to check its APY and see what your deposit could become.

Practical tips

• Compare savings accounts on APY, not the headline rate. APY already includes compounding, so it shows what you will actually earn over a year.
• Watch for fees and minimum-balance rules that can wipe out the extra yield. A monthly fee, or a balance that drops below a required minimum, can cost more than the interest you gain.
• Remember that APY assumes the rate stays fixed and no withdrawals are made. Real savings rates are variable, so the amount you actually earn may be higher or lower.
• Do not chase yield alone. A slightly lower APY with no fees can beat a higher APY with fees, so compare the full terms before you move your money.

Frequently asked questions

What is APY?

APY is the real yearly return on a savings account, including compound interest, expressed as a percentage. It shows how much your money grows in a year if you leave it untouched.

What is the difference between APY and APR?

APY includes compounding and is used for savings, where it shows what you earn. APR is used for borrowing and reflects the cost of a loan, rather than money you earn.

How often should interest be compounded?

Daily compounding gives the highest APY for the same interest rate, but the difference compared with monthly compounding is small. The interest rate itself and any fees usually matter far more than the compounding schedule.

Does a higher APY always mean more money?

Not always. Fees, minimum balances, withdrawal limits and rate changes can all reduce what you actually keep, so a lower-APY account can work out better in practice.