APY Calculator
Convert an interest rate and compounding frequency into annual percentage yield and one year of interest.
Free · No sign-up · Your inputs stay in your browser
Your numbers
Convert a quoted rate
Your projection
4.602% APY
One year's interest
$460.25
Extra from compounding
$10.25
Banks must quote savings yields as APY under the Truth in Savings Act, so two APYs are directly comparable. Loans are quoted as APR, which leaves compounding out.
About this tool
Method, assumptions, practical next steps, and limits.
Why two rates exist
APR is the stated yearly rate. APY includes the effect of compounding, so it is what the account actually earns in a year. Under the Truth in Savings Act, banks must quote savings yields as APY, which is what makes two offers comparable.
How the calculation works
APY = (1 + APR ÷ n)^n − 1, where n is the number of compounding periods a year.
A 4.50% rate compounded daily is a 4.602% APY. On $10,000 that earns $460.25 in a year, of which $10.25 is interest earned on interest.
Where it matters
The gap between APR and APY grows with the rate. On savings rates it is small; on a credit card at 24% APR compounded daily, the effective yearly cost is over 27%.
