APY Calculator
Calculate APY from Interest Rate
Compare Two APYs
Formula
APY = (1 + r/n)^n - 1
where r = stated annual rate, n = compounding periods per year
Frequently Asked Questions
What is APY?
APY (Annual Percentage Yield) is the effective annual rate of return on a deposit or investment, taking into account compound interest. It represents the actual amount of interest you earn or pay over a year, including the effect of compounding.
Why does compounding frequency matter?
More frequent compounding means interest is calculated and added to the balance more often, resulting in interest being earned on interest sooner. Daily compounding yields more than monthly, which yields more than quarterly, etc.
What is a good APY for a savings account?
APY rates vary with market conditions. High-yield savings accounts and money market accounts typically offer competitive rates. As of recent years, rates above 4% are considered strong. Always compare rates across multiple institutions.
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