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APY Calculator

Convert APR to APY. See how compounding frequency affects your actual yield.

%

Annual Percentage Yield

APY

5.1162%

Year-1 earnings on $10,000

$512

Growth of $10,000 over time

YearsBalanceInterest earned
1 yr$10,512$512
5 yr$12,834$2,834
10 yr$16,470$6,470
20 yr$27,126$17,126

Assumes a one-time deposit, no withdrawals, monthly (12) compounding.

APY by Compounding Frequency

Same 5% APR, different compounding

Daily

5.1267%

Monthly

5.1162%

Quarterly

5.0945%

Annually

5.0000%

Formula Used

APY = (1 + APR/n)n - 1

Where n = 12 (monthly compounding)

APY = (1 + 5/12)12 - 1 = 5.116190%

Researched by CentCalc Financial Editorial TeamData: Truth in Savings Act APY formula (Reg DD)

How This Is Calculated

This calculator converts an Annual Percentage Rate (APR) into an Annual Percentage Yield (APY) using the standard compounding formula.

APY formula: APY = (1 + APR/n)n − 1, where n is the number of compounding periods per year.

Common compounding frequencies:

  • Daily: n = 365 (used by Ally Bank, Marcus, and most compound-interest savings accounts)
  • Monthly: n = 12 (common for savings accounts)
  • Quarterly: n = 4
  • Annually: n = 1 (APY = APR)

The calculator also shows earnings on a $10,000 deposit over one year, and compares APY across all four compounding frequencies for the same APR, so you can see how compounding frequency affects yield.

APY = (1 + APR/n)^n − 1. More frequent compounding yields a slightly higher APY. Earnings example based on a $10,000 deposit over one year.

How to Read Your Results

What the numbers mean and how to use them

The APY Calculator shows you the true annual return on a savings account or CD after compounding. The key insight: the advertised APR (nominal rate) is not what you actually earn — compounding frequency determines your real yield.

APY vs APR difference

At 5% APR, monthly compounding gives 5.116% APY — you earn 0.116% more than the headline rate. Daily compounding gives 5.127%. The gap widens at higher rates.

What to do: When comparing two accounts, always use APY (not APR) — it is the only number that reflects actual earnings.

Compounding frequency impact

At 5% APR, the spread between daily (5.127%) and annual (5.000%) compounding is only 0.127%. For a $10,000 deposit over one year, that is $12.70.

What to do: Do not chase daily compounding at the expense of a higher base rate — a 5.5% APR monthly-compounded account beats a 5.0% APR daily-compounded account every time.

Earnings on $10,000

This row shows actual dollar earnings over one year. At 5% APY, $10,000 earns $500. At 4% APY, it earns $400. The 1% gap equals $100/year on a $10K balance.

What to do: Move idle cash from a 0.01% traditional account to a 4-5% high-yield account — on $10,000 that is roughly $400-500/year in found money.

Real-world rate context

As of 2026, the best high-yield savings accounts pay 4-5% APY, money market accounts 3.5-4.5%, and 12-month CDs 4.5-5.5%. Traditional big-bank savings still pay 0.01-0.50%.

What to do: If your account pays under 3% APY, you are likely leaving meaningful interest on the table.

When You'll Actually Use This

Comparing two savings accounts

Bank A offers 4.8% APR compounded daily; Bank B offers 4.85% APR compounded monthly. Enter each rate to see the APY — Bank A yields 4.918% APY, Bank B yields 4.962%. Bank B wins despite less frequent compounding, because the base rate is higher.

Evaluating a CD vs high-yield savings

A 12-month CD at 5.00% APY looks identical to a savings account at 5.00% APY, but the CD locks your money in. Use this calculator to verify both rates are quoted in APY (not APR) before deciding.

Checking if a promotional rate is honest

Some accounts advertise "5% APR" in large print. Enter 5% here with the account's actual compounding frequency — if the resulting APY is below 5.05%, the marketing is stretching the truth by conflating APR with APY.

Frequently Asked Questions

What is the difference between APR and APY?
APR is the simple annual rate without compounding. APY is the effective rate that accounts for compounding (interest on interest). APY is always equal to or higher than APR. 5% APR compounded monthly = 5.116% APY.
How is APY calculated?
APY = (1 + APR/n)^n − 1, where n is compounding periods per year. Monthly compounding uses n=12, daily uses n=365. More frequent compounding produces a slightly higher APY.
Which compounding frequency gives the highest APY?
Daily compounding gives the highest APY. At 5% APR: daily yields 5.127% APY, while annual yields exactly 5.000%. The difference is only 0.127%, so compounding frequency matters less than the base rate.
Why do banks advertise APY instead of APR?
For savings products, banks advertise APY because it shows the higher, post-compounding return. For loans, they advertise APR because it shows the lower, pre-compounding rate. Always check which rate you are being quoted.
What is a good APY for a savings account?
As of 2026, high-yield savings accounts offer 4–5% APY, while traditional banks offer 0.01–0.50%. Online banks generally offer the highest rates. Always compare APY when choosing a savings product.

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APY calculations assume constant rate. Actual savings rates fluctuate with market conditions. Earnings example is for illustration only.