APY Calculator

The bank calculates interest on your balance, often daily, and adds it to your account, often monthly. Your next round of interest is then based on the bigger balance. APY sums up that whole process as one yearly figure. If you deposit $10,000 at 4% APY and leave it for a year, you'd end with about $10,400, as long as the rate doesn't change.

APY is a yearly number, so you can't simply divide it by 12 for an exact monthly figure, though that gets you close. At 4.5% APY on $10,000, you'd earn roughly $37 in the first month. The exact monthly rate is (1 + APY) ^ (1 / 12) - 1, or 0.367% here. Each month's amount grows slightly as your balance rises.

Good rates move with the market, so compare today's offers rather than relying on a fixed number. Many large banks pay very little on regular savings, while online banks and credit unions often pay far more. Check the FDIC's national rates for the average, and look for an insured account that's well above it with no monthly fees.

Most checking accounts pay little or nothing, because they're built for spending and not saving. Some rewards checking accounts pay more, but often only if you meet conditions such as a number of debit card purchases or direct deposits, and only up to a certain balance. Read those limits carefully. For money you don't need right away, a savings account is usually a better fit.

A CD pays a stated APY if you leave your money in for the full term. The rate is usually fixed, so your return is known up front, and you might earn more than on a savings account if you can commit the funds. Withdrawing early usually triggers a penalty, often several months of interest, which could cut into your earnings or even your principal.

The interest rate is the stated rate before compounding, and APY is what you earn after it. If interest compounds more than once a year, APY is higher. At 5% with monthly compounding, the APY is 5.12%. At very low rates, the two look almost identical. At high rates, the gap grows, as the table above shows.

APY includes compounding and APR doesn't, and APR on a loan also includes fees. As a rule, savers see APY, and borrowers see APR. To compare on equal terms, convert one into the other. A 12% APR charged monthly works out to 12.68% a year. The calculator above shows this as the effective APY.

Credit cards are quoted in APR, but their interest usually compounds daily, so the effective yearly cost is higher than the APR suggests. A card with a 24% APR works out to about 27.1% if you carry a balance all year. See what that means for your balance with our credit card interest calculator.

Mathematically, yes. A rate of 72% compounded daily gives an APY above 100%. In practice, you won't see that on insured bank accounts. Very high APYs usually appear on crypto or other unregulated products, and they can reflect serious risk or, in some cases, a scam. If an account promises an extraordinary yield with no risk, treat it as a warning sign.

No. It's better than no interest at all, but $10,000 at 0.01% earns just $1 a year, while inflation is eroding what that money can buy. At 4%, the same balance would earn about $400. Unless that account brings other benefits you value, it's usually worth moving savings somewhere with a much higher rate and the same insurance.

There's no difference in the math. Effective annual rate (EAR) and APY both state a yearly rate after compounding. Banks in the US use APY for deposit accounts, and finance textbooks and professionals often say EAR. You can use the calculator above as an effective annual rate calculator too, since the results show the same figure.

Each one suits different situations. A fixed APY, as on many CDs, protects you if rates fall, but it leaves you behind if rates rise. A variable APY, as on most savings accounts, moves with the market and usually lets you withdraw when you want. Many savers use both: a savings account for easy access and CDs for money they can set aside.