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Free APY Calculator — Convert APR to Annual Percentage Yield

Enter your APR and compounding frequency to instantly see your true annual yield. Compare savings accounts, CDs, and HYSAs on an apples-to-apples basis.

Use this free APY calculator to convert any nominal APR to its true Annual Percentage Yield — daily, monthly, or quarterly compounding supported. Applies the formula APY = (1 + r/n)ⁿ − 1 and shows the dollar difference compounding makes on your balance. No sign-up required.

What Is APY (Annual Percentage Yield)?

APY (Annual Percentage Yield) is the real return on a savings account or CD after accounting for compound interest. Unlike APR, which is just the stated interest rate, APY includes the effect of compounding — making it the true cost/yield comparison tool for any interest-bearing account.

When a bank advertises a savings rate, they are required by US law (Truth in Savings Act) to disclose the APY. This makes APY the number you should always use when comparing accounts. A 5.00% APR compounded daily is actually 5.127% APY — meaning you earn $512.70 per year on $10,000, not $500.

The difference compounds over time. On a $50,000 emergency fund, choosing a HYSA with 5.00% APY over a traditional savings account at 0.01% APY means $2,493 more in interest every year.

How to Use This APY Calculator

  1. 1

    Enter the APR (Nominal Rate)

    Type in the annual interest rate as advertised by your bank or investment product — for example, 5.00. This is the nominal rate before compounding.

  2. 2

    Select the Compounding Frequency

    Choose how often interest is compounded: daily (365), monthly (12), quarterly (4), or annually (1). Most HYSAs and online banks compound daily or monthly.

  3. 3

    Enter Your Balance (optional)

    Add your account balance to see the exact dollar amount you will earn over one year. Useful for comparing two different accounts side by side.

  4. 4

    Read Your APY and Annual Earnings

    The calculator instantly shows your APY, total interest earned in 12 months, and the difference versus simple interest — so you know exactly what compounding is worth.

The APY Formula Explained

APY = (1 + r/n)n − 1
r
Nominal Rate (APR)
The stated annual interest rate as a decimal. 5% → r = 0.05
n
Compounding Periods/yr
How many times interest compounds per year: 12 = monthly, 365 = daily
APY
Annual Percentage Yield
The true annual return after compounding, expressed as a decimal

Worked example: 5.00% APR compounded daily (n=365):

APY = (1 + 0.05/365)365 − 1 = (1.0001370)365 − 1 = 5.127%

Real-World Examples

See how compounding frequency and rate differences affect your actual earnings.

HYSA at 5.00% APR compounded daily (n=365)

APY = 5.127%. On a $10,000 balance you earn $512.70 in one year — compared to $500.00 with simple interest. The extra $12.70 comes entirely from daily compounding. Over 5 years (assuming rate holds), that compounding gap grows to over $70.

CD at 4.75% APR compounded monthly (n=12)

APY = 4.849%. On $10,000 you earn $484.90/year. If the same CD compounded daily instead of monthly, APY would be 4.861% — only $1.20 more per year. This illustrates that compounding frequency matters far less than the rate itself when choosing between products.

Traditional savings at 0.01% APR vs HYSA at 5.00% APR — on $10,000

A traditional bank savings account at the national average of 0.01% APR earns just $1.00/year on $10,000. An HYSA at 5.00% APR (daily compounding) earns $512.70/year — a difference of $511.70 per year just from switching accounts. Over 10 years (assuming rates hold), that gap exceeds $6,600 in forgone earnings.

Frequently Asked Questions

What is APY?
APY stands for Annual Percentage Yield. It is the real rate of return on a savings account, CD, or investment over one year, accounting for the effect of compounding interest. Because compounding adds interest on top of previously earned interest, APY is always equal to or higher than the stated APR for the same product.
What is the difference between APY and APR?
APR (Annual Percentage Rate) is the simple annual interest rate without compounding. APY (Annual Percentage Yield) includes compounding and represents your actual earnings over a year. For example, a 5.00% APR compounded daily equals a 5.127% APY — a difference of $12.70 per $10,000 per year. Always compare accounts using APY, never APR.
How do I calculate APY from APR?
Use the formula: APY = (1 + r/n)ⁿ − 1, where r is the nominal annual rate (APR as a decimal) and n is the number of compounding periods per year. For a 5% APR compounded monthly (n=12): APY = (1 + 0.05/12)¹² − 1 = 0.05116 = 5.116%. For daily compounding (n=365): APY = (1 + 0.05/365)³⁶⁵ − 1 = 0.05127 = 5.127%.
What is the best HYSA APY in 2024?
As of 2024, the top high-yield savings accounts (HYSAs) offer APYs between 4.50% and 5.30%, compared to the national average savings account APY of just 0.46% (FDIC data). Leading online banks such as Marcus, Ally, SoFi, and Marcus frequently top the rankings. Always check current rates directly with the institution — rates change frequently with Federal Reserve policy.
Does compounding frequency matter?
Yes, but the real-world difference is small. On $10,000 at 5% APR: monthly compounding yields APY = 5.116% ($511.60/yr), daily compounding yields APY = 5.127% ($512.70/yr) — a difference of only $1.10 per year. The compounding frequency matters much more for large balances or very long time horizons. For most savers, the advertised APY is the correct number to compare.
Is APY different for CDs vs savings accounts?
The APY formula is identical for both, but CDs typically lock in a fixed APY for a set term (3 months to 5 years), while savings account APYs are variable and can change with the Fed funds rate. CDs often offer slightly higher APYs than HYSAs in exchange for restricting access to your money. Always compare CD APYs at the same term length when shopping rates.

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