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Free · APY math · Any compounding

APY calculator

Annual Percentage Yield converts a nominal interest rate to the effective annual return accounting for compounding. Calculate APY growth on any savings product.

APR → APY conversion that catches people · Regulation DD (12 CFR Part 1030) APY formula · TILA Reg Z APR rules
5% APR daily-compounded = 5.127% APY · 5% APR monthly = 5.116% APY
Banks quote APY on deposits and APR on loans because APY looks higher on the deposit side and APR looks lower on the lending side. For the same nominal rate, daily compounding adds ~1.1 bps over monthly — small unless you're talking large balances or long horizons.
We compute APY using the regulatory formula directly so the result matches what your bank's truth-in-savings disclosure has to show — most online converters use approximations that drift by a few bps.

How to Calculate APY (Annual Percentage Yield)

Convert a nominal APR to the effective APY in four steps using the regulatory APY formula APY = (1 + r/n)^n − 1.

  1. Step 1
    Enter the nominal annual rate (APR)

    Type the bank's stated APR or nominal rate (e.g., 5.00%). On a loan disclosure or deposit slip, this is the headline rate before compounding.

  2. Step 2
    Pick the compounding frequency

    Daily (n=365) for HYSAs and CDs; monthly (n=12) for some money market accounts; quarterly (n=4) for many international savings products; annual (n=1) for bonds with simple interest.

  3. Step 3
    Read the computed APY

    5.00% APR compounded daily = 5.127% APY. Compounded monthly = 5.116% APY. The result is what your balance actually earns in one year.

  4. Step 4
    Compare across products

    Always compare savings products by APY, not APR. A 4.95% daily-compounded HYSA beats a 5.00% annually-compounded competitor because effective APYs are 5.07% vs 5.00%.

APY vs APR — the key difference

Both are annual rates. The difference is compounding:

  • APR (Annual Percentage Rate): nominal rate, ignores intra-year compounding. Used for loans (legally required disclosure).
  • APY (Annual Percentage Yield): effective rate, includes compounding. Used for savings products.

Example: 5% APR compounded daily = 5.13% APY. The APY is what you actually earn — always compare savings products on APY.

APY formula

APY = (1 + r/n)^n − 1

r = nominal annual rate (APR)
n = compounding periods per year (365 daily, 12 monthly)

Examples at 5% nominal:

  • Annual compounding: 5.00% APY
  • Monthly compounding: 5.12% APY
  • Daily compounding: 5.13% APY
  • Continuous compounding: 5.13% APY (e^0.05 − 1)

When APY matters most

On short-term and small amounts, the APY-vs-APR gap is negligible. On large balances over years it adds up. $100k at 5% APR daily compounding for 10 years = $164,866. The same 5% as a simple annual rate (no compounding within year) = $162,889. ~$2,000 difference from compounding frequency alone.

APY Calculator FAQ

What does APY stand for?

Annual Percentage Yield. It's the effective annual return on a deposit account after factoring in how often interest compounds during the year. Banks must disclose APY (not just nominal rate) on savings products under federal Truth in Savings law.

How do I convert APR to APY?

Use the formula APY = (1 + APR/n)^n − 1 where n is the number of compounding periods per year. At 5% APR compounded daily: APY = (1 + 0.05/365)^365 − 1 = 5.13%.

Is APY the same as interest rate?

Almost. The interest rate is typically the nominal rate (without compounding). APY is the effective rate (with compounding). A 4.40% nominal rate compounded daily is a 4.50% APY — the second number is what you actually earn.

Does the APY include fees?

No — APY shows gross interest before any account fees. Most HYSAs have no fees, so APY = effective return. If your account has a monthly maintenance fee, deduct it manually to get net return.

Why is daily-compounded APY higher than monthly?

More frequent compounding means interest earns interest sooner. The difference shrinks as frequency increases. Daily and continuous compounding are nearly identical (5.127% vs 5.127% on 5% nominal) — past daily, frequency doesn't matter.

Can APY change?

Yes for variable-rate accounts (HYSAs, money market accounts) — they float with the Fed funds rate. Fixed-rate products like CDs and Treasury bonds lock in APY at purchase for the full term.

What's a good APY in 2026?

Rates change frequently. Compare the current APY, minimum balance, fees, transfer terms and insurance status in each institution disclosure before moving cash.

Is APY taxed?

Interest earned at any APY is taxed as ordinary income in the year it accrues. Banks issue Form 1099-INT if you earn over $10 in interest. The APY itself isn't taxed — what you actually earn from the APY is.

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General compound math.

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