APY Calculator: Compare Annual Percentage Yields
Two accounts can quote the same interest rate yet pay different money — compounding frequency is the difference, and APY is the number that settles it. Enter a rate and a compounding schedule, and this free calculator shows your true annual yield and the actual interest a deposit earns in one year. Add a second account to compare them side by side.
APY Calculator
How to Use This Calculator
Enter the amount you plan to deposit, then Account A's stated interest rate and how often it compounds. That alone gives you the APY and one year's interest. To compare two bank or credit union offers, fill in Account B's rate and compounding schedule too.
Click Calculate. You'll see the APY for each account, the interest earned in one year on your deposit, and the balance after one year. When two accounts are filled in, the comparison table shows which one pays more — and by exactly how many dollars.
Watch what happens when you change only the compounding frequency: the APY barely moves, which is exactly the point — the raw rate matters far more than the schedule. Click Reset to start over.
The Formula
The APY comes from APY = (1 + r ÷ n)ⁿ − 1, where r is the nominal annual rate and n is the number of compounding periods per year. The interest earned in one year is simply deposit × APY, and the balance after one year is deposit × (1 + APY).
Worked example: a 5% rate compounded daily. The formula gives APY = (1 + 0.05 ÷ 365)³⁶⁵ − 1 = 0.051267, or 5.127%. On a $10,000 deposit, one year's interest is $10,000 × 0.051267 = $512.67, and the balance ends at $10,512.67. Compounded monthly, the same 5% rate yields 5.116% — $511.62 on the same deposit, about a dollar less.
Tips
When comparing savings accounts, CDs or money market accounts, always compare the APY — it's the number regulators require precisely so that compounding schedules can't hide the truth. A higher APY is always a better deal on paper.
APY ignores fees, so read the fee schedule too: a $10 monthly maintenance fee costs $120 a year and can easily wipe out the difference between two APYs. Also check whether the rate is promotional — many banks offer a high teaser APY for the first few months only.
Frequently Asked Questions
What is the difference between APY and the interest rate?
The nominal interest rate is the stated yearly rate, while APY (annual percentage yield) is what you actually earn in a year after compounding is included. Because compounding pays interest on interest, the APY is always equal to or higher than the nominal rate. A 5% rate compounded daily has an APY of about 5.13%.
Why is APY higher than the stated rate?
Compounding. Each time interest is credited — daily, monthly or quarterly — it is added to your balance, and later interest is calculated on that larger balance. The more frequently interest is compounded, the more "extra" interest accumulates, which is why APY grows slightly with compounding frequency.
Which is better: daily or monthly compounding?
Daily compounding earns slightly more than monthly, but the difference is small. On a $10,000 deposit at 4%, daily compounding yields about $408.08 in a year versus $407.42 for monthly — about 66 cents difference. Always compare APY, not the raw rate, and you'll never be fooled by the compounding schedule.
Why do banks advertise APY instead of the interest rate?
Regulations in the U.S. require deposit accounts to advertise APY so customers can compare offers fairly, because two accounts with the same nominal rate but different compounding schedules earn different amounts. The APY levels the playing field — a higher APY is always the better deal.
Does APY include fees?
No. APY describes interest earnings only and does not account for monthly fees, minimum-balance requirements or penalties. A high-APY account with a $10 monthly fee can earn less than a lower-APY account with no fees — always read the fee schedule before opening an account.