Savings & Interest
APY Calculator
Convert any APR to its true Annual Percentage Yield (APY) by selecting the compounding frequency — and see actual interest earned on your principal.
Compounding Frequency
🔒 All calculations happen instantly in your browser. No data is sent to any server.
How the calculation works
APY = (1 + APR/n)ⁿ − 1
Where n = number of compounding periods per year (365 for daily, 12 for monthly, etc.)
Example: 5% APR compounded monthly → APY = (1 + 0.05/12)¹² − 1 = 5.1162%
5% APR compounded daily → APY = (1 + 0.05/365)³⁶⁵ − 1 = 5.1267%
Frequently Asked Questions
- APR is the stated annual rate without compounding. APY accounts for compounding — interest earned on interest. APY is always ≥ APR. When comparing savings accounts, use APY. When comparing loans (where APR understates the cost), also prefer APY.
- Because APY > APR when compounding occurs, banks advertise APY on savings accounts to show a higher number, and APR on loans to show a lower number. Both are legally required disclosures, but always convert to the same metric when comparing.
- For most savings products, the difference between daily and monthly compounding is small. At 5% APR: monthly APY = 5.1162%; daily APY = 5.1267%. The difference grows with higher rates and longer time periods but is rarely the deciding factor.
- EAR is another name for APY — the true annual return accounting for compounding. The formula is identical: EAR = (1 + r/n)ⁿ − 1. Finance textbooks use EAR; banking regulators in the US use APY.
- Simply compare APYs directly — the higher APY account earns more, regardless of how the rate is compounded. APY is standardised for comparison. For identical APYs, check for fees, minimum balance requirements, and withdrawal restrictions.