🌱 APY Calculator
Banks often show both APR and APY. APY includes compounding, so it is the better number for comparing savings accounts.
APY
How the APY Calculator works
The yearly rate is split across the compounding periods, grown for one year, and the gain is shown as a percentage.
APY = (1 + r ÷ n)^n − 1
(r = APR as a decimal, n = compounding periods per year)
Step-by-step calculation
- 1Enter the APR.
- 2Choose the compounding frequency.
- 3APY = (1 + r ÷ n)^n − 1.
Worked example
A 5.00% APR compounded monthly: APY = (1 + 0.05 ÷ 12)¹² − 1 = 5.116%.
APY Calculator examples
| Interest rate / APR (%) | APY |
|---|---|
| 3 | 3.042% |
| 4 | 4.074% |
| 5 | 5.116% |
| 6 | 6.168% |
| 8 | 8.3% |
Other inputs kept at the calculator's default values. Results calculated by this calculator.
Why use an APY Calculator?
Compare savings accounts fairly using the real yearly return.
Important factors that can affect your results
- Compounding frequency.
- Rate changes on variable accounts.
- Minimum balance requirements.
Frequently asked questions
Why is APY higher than APR?
Because interest earned during the year also earns interest. More frequent compounding makes the gap bigger.
Which number should I compare?
Compare APY for savings. For loans, lenders must show APR, which also includes some fees.
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Last reviewed November 2026 · How we build and check our tools · Report a problem