💹 APY Calculator

Turn any stated APR into the APY you actually earn once compounding is counted.

How it works

APR is the headline rate; APY is what you really earn after compounding does its quiet work. The conversion is APY = (1 + r/n)ⁿ − 1, where r is the APR as a decimal and n is how many times a year interest is added. Interest credited in January starts earning its own interest in February, and that small effect is exactly the gap between the two numbers.

Banks in the US must quote APY on savings accounts, which is why it is the fairest way to compare two accounts. If one bank quotes APR and another APY, convert before you judge.

An example

Take a stated APR of 5% with daily compounding. The calculator turns it into an APY of 5.13%. On a $10,000 balance held for a full year, that APY means $512.67 of interest — a little more than the flat $500 the APR alone would suggest. The gap looks tiny at 5%; at credit-card rates above 20% it becomes anything but tiny.

Common questions

Is APY or APR better for comparing accounts?

For savings, compare APY — it already includes compounding, so it shows your true yearly earnings. For loans, APR is the standard figure, though it still may not include every fee.

Why is daily compounding only slightly better than monthly?

Compounding more often helps, but with diminishing returns. Going from yearly to monthly adds a visible bump; going from monthly to daily adds only a few hundredths of a percent.

Can APY ever be lower than APR?

On a savings account, no — compounding only adds. If you see a lower APY, fees are probably being factored in, which is worth a closer look before opening the account.

Related calculators

This calculator gives estimates for learning. Rates, taxes and rules change, and your lender or the IRS has the final numbers — check big decisions against the real documents.