APY Calculator

APY is the annual percentage yield, the interest an account earns in one year as a percentage of the deposit, with compounding included. Regulation DD requires banks to state it for deposit accounts so that offers can be compared. A 4% rate compounded daily is a 4.081% APY, and $10,000 at that APY earns $408.08 in a year.

The APR on a savings account is the plain interest rate, with no compounding. The APY includes compounding, so it is the same or higher. A 12% rate compounded monthly is a 12.68% APY. On loans the APR is a different measure: it is the yearly cost of credit, which relates the amount and timing of the money received to the payments made.

Use APY = (1 + r / n)^n − 1. The letter r stands for your stated yearly rate written as a decimal, so 5% is 0.05, and n counts how many times a year the interest is added. For 5% compounded monthly, (1 + 0.05 / 12)^12 − 1 = 0.051162, or 5.116% APY. For continuous compounding use e^r − 1, which gives 5.127% for 5%.

The more often interest is added, the higher the APY for the same rate. At a 5% rate the APY is 5.000% compounded once a year, 5.0625% twice a year, 5.095% quarterly, 5.116% monthly, 5.127% daily and 5.127% continuously. The chart under the calculator shows the same comparison for your rate.

Only a little. On $10,000 at a 5% rate, interest compounded once a year earns $500 in the first year and daily compounding earns $512.67, a gap of $12.67. After 10 years the balances are $16,288.95 and $16,486.65. A rate that is half a percentage point higher matters far more than the compounding schedule.

It is the limit when interest is added in every instant, so the number of periods n grows without bound and (1 + r / n)^n becomes e^r. A 5% rate compounded continuously is a 5.127% APY. Banks rarely use it. Daily compounding already gets to within 0.001 percentage point of it.

Many accounts apply a daily rate, the interest rate divided by 365, to the balance each day and add the interest to the account every month. Over a year that adds up to the APY. At a 4.08% APY, $10,000 earns about $33.38 in the first month and $408 in a year. The APY already includes compounding, so do not compound it again.

A 12% interest rate compounded monthly is a 12.68% APY: $1,000 earns $126.83 in a year, not $120. If the 12% is the APY instead, the rate behind it, compounded monthly, is 11.39%. Choose "Rate → APY" for the first case or "APY → rate" for the second and pick the compounding.

It depends on the market and your alternatives. At a 3.5% APY, $10,000 earns $350 in a year, $712.25 in two years, before tax. Compare it with the national average rates the FDIC publishes, with other banks and credit unions, and with inflation: at 3% inflation the real APY is 0.485%. Enter your own inflation and tax rates above.

Choose "APY → rate", enter the APY and the compounding. The result is the stated yearly rate behind it, using r = n × ((1 + APY)^(1/n) − 1). A 5% APY compounded monthly comes from a 4.889% rate, and compounded daily from a 4.879% rate. If interest compounds once a year, the rate equals the APY.

In one year, $350, $400, $425, $450 and $500, before tax. In five years the balance grows to $11,876.86 at 3.5%, $12,166.53 at 4%, $12,313.47 at 4.25%, $12,461.82 at 4.5% and $12,762.82 at 5%. Enter any other APY in "APY → rate" to see the earnings, the rate and the real yield.

Real APY is the APY adjusted for inflation: (1 + APY) / (1 + inflation) − 1. It shows how fast your buying power grows. A 4.081% APY with 3% inflation is a real APY of 1.049%. If inflation is higher than the APY, the real APY is negative and the money buys less each year even though the balance rises.

It is the APY you keep after taxes: APY × (1 − tax rate). Interest is taxed as ordinary income. At a 22% tax rate, a 4.081% APY becomes 3.183% after tax, and $408.08 of interest becomes $318.31. The calculator applies one tax rate to the whole term and does not model state-specific rules.

The quoted APY does not include account fees, so subtract them yourself. A $5 monthly fee is $60 a year. On a $1,000 balance at a 4% APY, which earns $40, that leaves you $20 behind. Net yield is roughly the APY minus yearly fees divided by the balance, so fees matter most on small balances.

Use the APR. Federal rules (Regulation Z) define it as a measure of the cost of credit, expressed as a yearly rate, so a lower APR is the cheaper loan when the term and the fees are comparable. APY is the figure for deposits. If you want to see how monthly compounding raises a loan rate, convert it with "Rate → APY".

Only for the term of a fixed-rate account such as a certificate of deposit. The rate of a savings account is variable and the bank can change it at any time, so its APY is a snapshot. The calculation also assumes the money stays in the account. FDIC insurance covers up to $250,000 per depositor, per bank, per ownership category, but it does not guarantee a rate.

Interest is generally taxable income in the year it is paid or credited to you, at your regular federal rate and in most states at the state rate. The bank reports interest of $10 or more to you and the IRS on Form 1099-INT, but interest below that is still taxable. IRS Topic 403 explains the rules. Ask a tax professional about your situation.