APY Calculator
Calculate Annual Percentage Yield with compound interest analysis
Calculate Annual Percentage Yield
Annual percentage rate before compounding
How often interest compounds per year
Starting deposit amount for balance projection
Duration for balance calculation
APY Results
APY Formula: APY = (1 + r/n)^n - 1
Calculation: (1 + 0%/12)^12 - 1 = 0.000%
Compound Effect: +0.000% boost from compounding
Example Calculation
High-Yield Savings Account
Account Type: Online savings account
Nominal Rate: 4.25% APR
Compounding: Monthly (12x per year)
Initial Deposit: $10,000
APY Calculation
APY = (1 + 4.25%/12)^12 - 1
= (1 + 0.003542)^12 - 1
= (1.003542)^12 - 1
= 4.334% APY
After 1 year: $10,433.40 (+$433.40 interest)
Typical APY Rates (2024)
APY vs APR
APY (Annual Percentage Yield)
APR (Annual Percentage Rate)
Compounding Impact
More frequent compounding = higher APY
Daily compounding beats monthly by small margin
Longer time periods amplify compounding effect
Compare APY when shopping for accounts
Check for minimum balance requirements
Understanding Annual Percentage Yield (APY)
What is APY?
Annual Percentage Yield (APY) is the effective annual rate of return on an investment, taking into account the effect of compounding interest. It represents what you actually earn over a year, making it the best metric for comparing different savings products.
Why APY Matters
- •Shows true earning potential
- •Accounts for compound interest
- •Enables accurate comparisons
- •Required by law for disclosure
APY Formula Breakdown
APY = (1 + r/n)^n - 1
- r: Nominal interest rate (APR)
- n: Number of compounding periods per year
- APY: Effective annual yield
Compounding Frequency Impact
- Annual (n=1): Interest compounds once per year
- Quarterly (n=4): Interest compounds every 3 months
- Monthly (n=12): Interest compounds every month
- Daily (n=365): Interest compounds every day
Real-World Applications
Savings Account Selection
Account Comparison
Compare different banks and account types using APY
- • High-yield online banks
- • Traditional brick-and-mortar banks
- • Credit union accounts
- • Money market accounts
Certificate of Deposit (CD)
Fixed-Term Investments
Evaluate CD terms and expected returns
- • 6-month to 5-year terms
- • Penalty calculations
- • Laddering strategies
- • Rate comparison shopping
Investment Planning
Financial Goals
Calculate returns for emergency funds and short-term goals
- • Emergency fund growth
- • Short-term savings goals
- • Risk-free return baseline
- • Cash position optimization