APY Calculator
Convert an interest rate and compounding schedule into the true annual percentage yield, and see what your deposit earns.
How the APY Calculator Works
APY, or annual percentage yield, shows what you actually earn in a year after compounding. Two accounts with the same stated rate can pay different yields if one compounds daily and the other annually. Enter your deposit, the rate and the compounding schedule to see the true yield and the dollars earned.
APY vs APR
APR is the simple yearly rate without compounding and is common for loans. APY includes compounding and is the right number for comparing savings accounts, CDs and money market accounts. Our guide to APY vs APR explains the difference in detail.
Example: $10,000 at 4.25%
A $10,000 deposit earning a 4.25% stated rate compounded daily has an APY of about 4.34%, so it earns roughly $434 in the first year. If the same rate compounded only annually, the APY would equal 4.25% and earn $425. The gap looks small, but it grows with bigger balances and longer terms.
How to Read Your Results
APY is the number to compare across savings accounts, money market accounts and CDs. The balance and interest lines project what you would earn if the rate never changed, which is a useful benchmark even though most savings rates are variable.
Tips for Choosing an Account
- Compare APY, not just the stated rate.
- Check minimum balances and monthly fees.
- Verify FDIC or NCUA insurance.
- Ask whether a promotional rate expires.
How APY Is Calculated
APY, or annual percentage yield, is calculated as (1 + r/n)^n − 1, where r is the stated annual rate as a decimal and n is the number of compounding periods per year. For a 4.25% rate compounded daily, n is 365 and APY is (1 + 0.0425/365)^365 − 1, or about 4.34%. The calculator uses this yield to project your balance after the years you enter: deposit × (1 + APY)^years, and shows the interest you would earn if the rate and balance stayed unchanged. Most savings rates are variable, so treat the results as a benchmark for comparison rather than a guarantee.
APY at Different Rates and Compounding Schedules
| Stated rate | Annual | Quarterly | Monthly | Daily |
|---|---|---|---|---|
| 3% | 3.000% | 3.034% | 3.042% | 3.045% |
| 4% | 4.000% | 4.060% | 4.074% | 4.081% |
| 4.5% | 4.500% | 4.577% | 4.594% | 4.602% |
| 5% | 5.000% | 5.095% | 5.116% | 5.127% |
The differences among schedules are small at typical savings rates, but they widen as rates and balances rise. On a large balance, even a few hundredths of a percentage point matter, so compare accounts using APY, which is the standard disclosure for deposit accounts.
What Different APYs Earn in One Year
Here is the interest earned in a year on common deposits at three yields, assuming no withdrawals or new deposits:
| Deposit | APY 3% | APY 4% | APY 5% |
|---|---|---|---|
| $1,000 | $30 | $40 | $50 |
| $5,000 | $150 | $200 | $250 |
| $10,000 | $300 | $400 | $500 |
| $25,000 | $750 | $1,000 | $1,250 |
| $50,000 | $1,500 | $2,000 | $2,500 |
Comparing an account that pays 0.5% with one that pays 4% on $25,000 shows the cost of leaving money in a low-yield account: about $875 a year. See how high-yield savings accounts work.
Step-by-Step: Compare Savings Accounts
- List the accounts you are considering, including your current one.
- Write the APY for each. If only an interest rate is shown, enter it and the compounding schedule in the calculator.
- Check minimum balance requirements and monthly fees that reduce your yield.
- Verify FDIC or NCUA insurance and the insured limit.
- Check whether the rate is promotional and how long it lasts.
- Consider how quickly you can move money to your checking account.
- Choose the best mix of APY, access and fees for your goal.
APY vs APR vs Interest Rate
The interest rate is the stated rate before compounding. APR is used mainly for loans and credit cards and includes certain fees but not compounding within the year. APY includes compounding and is used for deposit accounts. When comparing savings, use APY; when comparing loans, use APR and total cost. Read the detailed comparison in APY vs APR.
Where to Put Your Savings: Options Compared
- High-yield savings: flexible access with a variable APY.
- Money market accounts: similar yields with possible check-writing. See money market vs savings.
- CDs: fixed APY for a term with penalties for early withdrawal. See CDs explained.
- Checking accounts: usually low or no interest.
- Treasury securities and I bonds: government-backed options with different tax treatment.
Pair your savings choice with a plan. Use the savings goal calculator and build a cushion with the emergency fund guide.
Worked Example: Comparing Two Real Accounts
Imagine you have $20,000 and are choosing between Account A, which advertises a 4.10% rate compounded daily, and Account B, which advertises a 4.15% rate compounded annually. Account A's APY is about 4.18% and Account B's APY is exactly 4.15%. After one year, Account A earns roughly $836 and Account B earns $830. The gap is small, but Account A wins even though its stated rate looks lower. Now add a $5 monthly fee to Account A. That fee reduces your earnings by $60 a year, so Account B would come out ahead. The lesson is to look at APY, fees and minimum balances together, and to compare after-fee yields.
Understanding Each Input and Result
- Deposit amount: the balance you plan to keep in the account. If you plan to add or withdraw money, run the calculation for your typical balance.
- Stated interest rate: the nominal annual rate printed in the account terms.
- Compounding: how often interest is added: daily, monthly, quarterly or annually. Daily and monthly are common for savings accounts.
- Years: the period you want to project. Decimals such as 0.5 work for six months.
The result shows the APY, the balance after the chosen period, interest earned and interest in the first year. If you compare two accounts, run both and pay attention to the difference in dollars, not just percentage points.
Hidden Factors That Affect Your Real Yield
- Fees: monthly maintenance fees can cancel out a higher APY.
- Minimum balances: if your balance falls below the minimum, the rate may drop or fees may apply.
- Tiered rates: some accounts pay higher yields only on balances above certain thresholds.
- Promotional periods: teaser rates often expire after a few months.
- Taxes: interest is taxable income, so your after-tax yield is lower.
- Inflation: a 4% yield with 3% inflation grows your buying power by about 1% a year.
APY results at a glance
These are the calculator's results at different values of deposit Amount, with every other input left at the example values above (the bold row is the example). Use them to see how quickly the result changes before entering your own numbers.
| Deposit Amount | Annual Percentage Yield (APY) | Balance after 1 year(s) | Interest earned |
|---|---|---|---|
| $5,000 | 4.34% | $5,217.07 | $217.07 |
| $7,500 | 4.34% | $7,825.60 | $325.60 |
| $10,000 | 4.34% | $10,434.13 | $434.13 |
| $13,000 | 4.34% | $13,564.38 | $564.38 |
| $15,000 | 4.34% | $15,651.20 | $651.20 |
| $20,000 | 4.34% | $20,868.27 | $868.27 |
| $30,000 | 4.34% | $31,302.40 | $1,302.40 |
How compounding changes the result
The same example with each compounding option:
| Compounding | Annual Percentage Yield (APY) | Balance after 1 year(s) | Interest earned |
|---|---|---|---|
| Daily | 4.34% | $10,434.13 | $434.13 |
| Monthly | 4.33% | $10,433.38 | $433.38 |
| Quarterly | 4.32% | $10,431.82 | $431.82 |
| Annually | 4.25% | $10,425.00 | $425.00 |
What changing stated Interest Rate does
Holding everything else at the example values, here is the effect of stated Interest Rate:
| Stated Interest Rate | Annual Percentage Yield (APY) | Balance after 1 year(s) | Interest earned |
|---|---|---|---|
| 2.1% | 2.12% | $10,212.21 | $212.21 |
| 4.25% | 4.34% | $10,434.13 | $434.13 |
| 6.4% | 6.61% | $10,660.86 | $660.86 |
| 8.5% | 8.87% | $10,887.06 | $887.06 |
What $10,000 earns in a year at different APYs
| APY | Interest in one year | Balance after one year |
|---|---|---|
| 0.50% | $50 | $10,050 |
| 2.00% | $200 | $10,200 |
| 3.50% | $350 | $10,350 |
| 4.00% | $400 | $10,400 |
| 4.50% | $450 | $10,450 |
| 5.00% | $500 | $10,500 |
APY already includes compounding, so one year's interest is simply the balance times the APY, if the rate stays the same all year.
Common Questions
Is a higher APY always better?
For the same safety and access, yes. Also check minimum balances, fees and whether the rate is promotional.
Are savings rates fixed?
Most savings account rates are variable and can change. CDs lock in a rate for a set term.
Why does APY differ from the interest rate?
APY includes the effect of compounding interest during the year.
Do banks have to disclose APY?
Yes, federal rules require deposit accounts to disclose APY.
Do I pay taxes on the interest I earn?
Interest is generally taxable income in the year it is earned, and your bank will send Form 1099-INT if it exceeds a small threshold.
How often do banks change savings rates?
Variable rates can change at any time, often following market rates and competitive pressure.
Can I use this calculator for a CD?
Yes. Enter the CD rate, compounding schedule and term in years.
What is the difference between APY and APR on a credit card?
Cards quote APR; because interest compounds daily on balances you carry, your effective yearly cost is higher than the APR.
What is a good APY for a savings account?
Good yields change with market conditions. Compare current offers from insured banks and credit unions and choose one that is meaningfully above the national average.
Can APY change after I open the account?
Yes, most savings and money market accounts have variable APYs.
How does APY differ from the interest rate my bank advertises?
The advertised interest rate is the nominal yearly rate. APY adds the effect of compounding, so it is slightly higher when interest is added more than once a year. Banks must disclose APY for deposit accounts so you can compare them fairly, and it is the number to use when choosing between savings accounts, money market accounts and CDs.
How much will $10,000 earn in a high-yield savings account?
At a 4% APY, $10,000 would earn about $400 in a year if the rate and balance stay the same. At 0.5%, it would earn about $50. Because rates are variable, your actual earnings may be higher or lower, but the comparison shows why moving idle cash into a competitive account can matter.
Do CDs and savings accounts compound the same way?
Both can compound daily or monthly, but a CD locks in the rate for the term while a savings account rate can change. Compare the APY, the term and the early withdrawal penalty when choosing a CD, and consider a ladder if you want access to part of your money at regular intervals.
Is the interest I earn taxable?
Yes, interest is generally taxed as ordinary income in the year it is credited, even if you do not withdraw it. Your bank will send a Form 1099-INT if you earn $10 or more in interest, and you must report all interest income whether or not you receive the form.
What is a good way to protect my savings from inflation?
Keep emergency funds in a competitive high-yield account, invest long-term money in diversified assets and check that your after-tax yield is at least close to inflation. Some savers use Treasury inflation-protected securities or I bonds for a portion of their savings.
Can I use APY to compare a savings account with a bond?
APY is designed for deposit accounts. Bonds use yield measures such as current yield and yield to maturity, and they carry price and credit risk, so compare them using their own metrics and consider your goals and risk tolerance.
How much is 4% APY on $5,000 per month?
About $16.67 a month on average, or $200 for the year if the rate stays the same.
Is APY the same as interest rate?
No. APY includes compounding over a year; the interest rate (or APR) does not.
Does APY assume I leave interest in the account?
Yes. Withdrawing interest as it is paid lowers what you actually earn below the stated APY.
Does APY account for taxes?
No. Interest is taxable income, so your after-tax yield is lower than the APY.
What is a promotional APY?
A higher introductory rate for a limited time; check what rate applies after the promotion ends.
How often do banks compound interest?
Most savings accounts compound daily or monthly; the APY reflects whichever schedule the bank uses.
How to check this calculator
This calculator shows the tax year, assumptions, inputs, and worked examples used to explain the estimate. Where result tables are provided, you can enter the example values in the calculator and compare the output with the displayed example to reproduce the calculation.
Tax and payroll rules can change, and a calculator estimate is not the same as an employer payroll statement or filed tax return. For an important decision, compare the result with your pay stub and the relevant official IRS, Social Security Administration, Department of Labor, or state guidance. See our methodology and editorial approach for source and review information.
Results are estimates for education only and are not financial, tax or legal advice.