APY Calculator
También en español: Calculadora de interés compuesto →
Compounding daily turns a 4.50% rate into a 4.60% yield, assuming you leave the interest in the account.
How the APY calculation works
APY = (1 + r/n)^n − 1
r is the stated yearly rate and n the number of times it compounds in a year. 4.5% compounded daily is (1 + 0.045/365)^365 − 1 = 4.60%.
More frequent compounding gives a higher APY
At 4.5%, annual compounding gives 4.50%, monthly 4.59% and daily 4.60%. The gap grows as the rate rises.
Interest earned = deposit × ((1 + APY)^years − 1)
$50,000 for one year at a 4.60% APY earns $2,301.25, as long as the interest stays in the account.
Compare accounts by APY, not by rate
Banks must quote APY on deposit accounts, so it is the fair way to compare a savings account, a money market account and a CD.
Worked example. A business keeps a $50,000 cash reserve in a savings account paying 4.50% compounded daily. That is an APY of 4.60%, so after one year the reserve earns $2,301.25 and grows to $52,301.25.
APY FAQ
How do you calculate APY?
APY = (1 + r/n)^n − 1, where r is the yearly interest rate as a decimal and n the compounding periods per year. For continuous compounding use e^r − 1.
What is the difference between APY and APR?
APR is the stated yearly rate without compounding. APY includes the effect of compounding, so it is equal to or higher than the APR. Savings products quote APY; loans usually quote APR.
How much interest will $50,000 earn in a year?
At a 4.60% APY it earns $2,301.25. Change the rate and deposit above to see what your own account pays.
Does daily or monthly compounding make a big difference?
Not much. At 4.5%, daily compounding gives a 4.603% APY and monthly 4.594%, a difference of about $4 a year on $50,000.
How do I use this as a CD APY calculator?
Enter the CD's rate and compounding, the amount you deposit and the term in years, e.g. 0.5 for a 6-month CD. The ending balance is what you get back at maturity, before any early-withdrawal penalty.