Turn a stated interest rate and compounding frequency into the real annual percentage yield you'll earn.
APY
4.498%
Effective annual yield including compounding.
Extra from compounding.
APY is the number that actually matters, because it includes the effect of compounding within the year. On a $10,000 balance, that's $450 of interest in a year — $10 more than the $440 you'd get from simple interest at the same rate.
Two accounts can quote the same interest rate but pay different amounts if they compound differently. APY normalizes for that, which is why US banks are required to disclose it. When shopping for savings, CDs or money-market accounts, the APY is the apples-to-apples figure — ignore the nominal rate.
APY tells you this year's return; compounding tells you the long game. Run your balance and APY through the savings calculator to see what regular contributions grow into over several years.
High-yield savings calculatorWorked scenarios with the full analysis, so you can see how the numbers move before entering your own.
A typical high-yield savings account quoting a nominal rate with daily compounding.
APY
4.498%
APY is the number that actually matters, because it includes the effect of compounding within the year. On a $10,000 balance, that's $450 of interest in a year — $10 more than the $440 you'd get from simple interest at the same rate.
Two accounts can quote the same interest rate but pay different amounts if they compound differently. APY normalizes for that, which is why US banks are required to disclose it. When shopping for savings, CDs or money-market accounts, the APY is the apples-to-apples figure — ignore the nominal rate.
APY tells you this year's return; compounding tells you the long game. Run your balance and APY through the savings calculator to see what regular contributions grow into over several years.
High-yield savings calculatorA rate compounded monthly, showing the small yield lift over the stated rate.
APY
5.116%
APY is the number that actually matters, because it includes the effect of compounding within the year. On a $10,000 balance, that's $512 of interest in a year — $12 more than the $500 you'd get from simple interest at the same rate.
Two accounts can quote the same interest rate but pay different amounts if they compound differently. APY normalizes for that, which is why US banks are required to disclose it. When shopping for savings, CDs or money-market accounts, the APY is the apples-to-apples figure — ignore the nominal rate.
More frequent compounding raises the yield slightly. At the same 5% rate, daily compounding gives 5.127% APY versus your 5.116% — a small edge that grows with the balance and time. It's rarely worth switching accounts for alone, but it's a real difference.
Annual compounding, where the APY equals the nominal rate exactly.
APY
3%
APY is the number that actually matters, because it includes the effect of compounding within the year. On a $10,000 balance, that's $300 of interest in a year — $0 more than the $300 you'd get from simple interest at the same rate.
Two accounts can quote the same interest rate but pay different amounts if they compound differently. APY normalizes for that, which is why US banks are required to disclose it. When shopping for savings, CDs or money-market accounts, the APY is the apples-to-apples figure — ignore the nominal rate.
More frequent compounding raises the yield slightly. At the same 3% rate, daily compounding gives 3.045% APY versus your 3% — a small edge that grows with the balance and time. It's rarely worth switching accounts for alone, but it's a real difference.
A larger balance where the compounding difference translates to more real dollars.
APY
4.835%
APY is the number that actually matters, because it includes the effect of compounding within the year. On a $50,000 balance, that's $2,418 of interest in a year — $43 more than the $2,375 you'd get from simple interest at the same rate.
Two accounts can quote the same interest rate but pay different amounts if they compound differently. APY normalizes for that, which is why US banks are required to disclose it. When shopping for savings, CDs or money-market accounts, the APY is the apples-to-apples figure — ignore the nominal rate.
More frequent compounding raises the yield slightly. At the same 4.75% rate, daily compounding gives 4.864% APY versus your 4.835% — a small edge that grows with the balance and time. It's rarely worth switching accounts for alone, but it's a real difference.
APY — annual percentage yield — is the real return you earn on savings in a year, including the effect of compounding. A nominal interest rate ignores compounding; APY builds it in, which is why APY is always equal to or higher than the stated rate, and why it's the only fair way to compare accounts.
The gap comes from earning interest on your interest. If an account pays 5% compounded monthly, each month's interest starts earning its own interest, so the effective yield ends up slightly above 5%. The more often it compounds — daily beats monthly beats annually — the higher the APY for the same nominal rate.
APY and APR look similar but describe opposite sides of a transaction. APY (yield) is what you earn on savings and includes compounding. APR (rate) is what you pay on a loan and generally does not include compounding, though it does include certain fees. When you're saving, higher APY is better; when you're borrowing, lower APR is better.
The practical takeaway: compare savings products by APY and loans by APR, and don't compare one to the other. A card's 22% APR and a savings account's 4.5% APY aren't directly comparable figures, even though both are percentages — which is exactly why carrying card debt while holding savings is usually a losing trade.
Two accounts with the same rate can pay different amounts if they compound differently. Always compare by APY instead.
APY is for what you earn; APR is for what you pay. Mixing them up leads to bad comparisons between savings and loans.
The jump from monthly to daily compounding is small. Chasing it while ignoring a lower headline rate is a poor trade.
APY is a pre-tax figure. Interest is taxed as ordinary income, so your after-tax yield is lower than the advertised APY.
A savings account's APY isn't locked — it moves with the market. Today's APY isn't guaranteed for the year the way a CD's is.
APY, or annual percentage yield, is the effective annual return on savings including the effect of compounding. It's always equal to or higher than the stated nominal rate, and it's the standard figure US banks disclose so you can compare accounts fairly.
The interest rate is the simple stated rate; APY includes compounding within the year, so it's always equal to or higher. Two accounts with the same rate but different compounding frequencies pay different amounts — APY captures that difference, which is why it's the number to compare.
APY = (1 + r ÷ n)ⁿ − 1, where r is the nominal annual rate and n is the number of compounding periods per year. For example, 4.4% compounded daily (n = 365) works out to about 4.499% APY. Enter a rate and frequency above to see the result.
APY (yield) is what you earn on savings and includes compounding; APR (rate) is what you pay on loans and generally doesn't include compounding but may include fees. Compare savings by APY and loans by APR — they measure opposite sides of a transaction.
A little. At the same nominal rate, daily compounding yields slightly more than monthly, which yields slightly more than annually. The difference is small on typical balances — a few dollars per $10,000 — so it's rarely worth switching accounts for on its own, but it's real.
The next calculations that usually follow this one.
Project your balance with monthly deposits — and see how much a high-yield account earns over a big-bank one.
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See the balance, the split between contributions and growth, and what it actually buys.
Work backwards from the number you need to the monthly amount that gets you there.
Translate future dollars into today's purchasing power — the adjustment most plans skip.
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