APY Interest Calculator

Use this calculator to estimate your earnings from a high-yield savings account or a CD (Certificate of Deposit). Simply enter your initial balance, APY, and compounding period to see your potential growth over time.

Account Type:

Savings Account CD (Certificate of Deposit)

Start Date:

CD Term: None 1 Month 3 Months 6 Months 8 Months 9 Months 11 Months 12 Months 18 Months 2 Years 3 Years

Balance:

APY:

APR:

Compounding Period:

Daily Weekly Monthly

Calculate

How is APY Interest Calculated?

APY (Annual Percentage Yield) represents the real rate of return on your savings, considering compounding interest.

Formula: APY = (1 + r/n)ⁿ - 1, where:

• r = Interest rate (APR) as a decimal
• n = Number of compounding periods per year

What is Compounding Frequency?

Compounding frequency refers to how often interest is added to your balance. The more frequently interest compounds, the faster your savings grow.

Common Compounding Frequencies:

• Daily: Interest is compounded every day, leading to higher returns.
• Monthly: Interest is added once a month.
• Quarterly: Interest is compounded every three months.
• Annually: Interest is compounded once per year, growing at a slower rate.

How Does Compounding Frequency Impact Interest Earned?

A higher compounding frequency means interest is calculated and added to your balance more often, allowing your money to grow faster. For example, an account with **daily compounding** will yield more interest over time than one with **monthly compounding**, even if both have the same APY.

How to Find Your Bank’s Compounding Frequency?

To check your bank’s compounding frequency:

• Visit your bank’s website and look at the savings account details.
• Check the **terms and conditions** section for interest calculation methods.
• Contact customer support and ask about the **compounding frequency**.
• Review your account statement to see how often interest is credited.

FAQs

What’s the difference between APY and APR?

APR (Annual Percentage Rate) is the raw interest rate, while APY includes the effect of compounding, making it more accurate for savings accounts.

Why is compounding important?

Compounding allows interest to earn additional interest, increasing your overall returns. The more frequent the compounding, the greater your savings growth over time.