How to use the APY Calculator
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The formula
APY = (1 + r ÷ n)^n − 1
Examples
- 4.5% compounded daily on 10,000 for 1 year
APY: 4.60% Interest on $10,000.00 after 1 year(s): $460.25 Balance: $10,460.25
- 5% compounded monthly on 5,000 for 3 years
APY: 5.12% Interest on $5,000.00 after 3 year(s): $807.36 Balance: $5,807.36
- 3.9% compounded yearly on 20,000 for 5 years
APY: 3.90% Interest on $20,000.00 after 5 year(s): $4,216.30 Balance: $24,216.30
Limitations and assumptions
Assumes a fixed rate with no deposits or withdrawals. Bank rates can change.
Frequently asked questions
What is the APY formula?
APY = (1 + r ÷ n)^n − 1, where r is the stated rate and n is the compounding periods per year.
APY or APR: which is higher?
For savings, APY is higher because it includes compounding. For loans, APR is the cost measure.
Does more frequent compounding matter?
Slightly. Daily compounding gives a small edge over monthly, and yearly compounding gives none.
Are taxes included?
No, interest earned is before tax.