APY Calculator

An APY calculator helps you understand the true earning potential of your savings or investments. APY (Annual Percentage Yield) accounts for compounding, while APR (Annual Percentage Rate) does not. This APY calculator shows the difference compounding frequency makes on your returns.

APY Formula: APY = (1 + r/n)^n - 1

• r = Annual interest rate (APR) as a decimal
• n = Number of compounding periods per year
• The more frequently interest compounds, the higher your APY

APY vs APR - Key Differences:

• APY: Includes the effect of compounding - what you actually earn
• APR: Simple annual rate without compounding - the nominal rate
• Savings accounts: Look at APY to see your true returns
• Loans: APR is typically used, but APY shows the true cost

Compounding Frequency Impact: Daily compounding yields the highest APY, followed by monthly, quarterly, semi-annually, and annually. Even small differences in compounding frequency can significantly impact your long-term returns. Use this APY calculator to compare different savings options and choose the account with the highest APY for maximum growth.