📊 APY Calculator

APR (Annual Percentage Rate) is the simple interest rate without considering compounding effects. APY (Annual Percentage Yield) includes the effect of compound interest, showing the actual amount you'll earn in a year. APY is always equal to or higher than APR because it accounts for interest earned on previously earned interest.

The more frequently interest compounds, the more you earn. Daily compounding yields more than monthly, which yields more than annual compounding. For example, a 5% APR compounded daily gives an APY of 5.127%, while the same rate compounded monthly gives 5.116%, and annually gives exactly 5.000%.

High-yield savings accounts and online banks typically offer the highest APYs, often 10-20 times higher than traditional brick-and-mortar banks. As of 2024, competitive high-yield savings accounts offer APYs ranging from 4% to 5.5%. Always compare APY (not just APR) when choosing accounts, and check for minimum balance requirements or fees.

Use the formula: APY = (1 + APR/n)^n - 1, where n is the number of compounding periods per year. For daily compounding, n = 365; for monthly, n = 12; for quarterly, n = 4. This calculator does the conversion automatically for you.

Yes, APY can change based on market conditions and Federal Reserve interest rate decisions. Variable-rate accounts adjust their APY periodically, while fixed-rate accounts (like CDs) lock in the APY for a specific term. Always check if an account offers a variable or fixed APY before opening it.

For FDIC-insured savings accounts and CDs, your principal and earned interest (up to $250,000 per depositor per bank) are guaranteed by the federal government. However, the APY rate itself may change for variable-rate accounts. Fixed-rate CDs guarantee the APY for the entire term.