Use this APY calculator to estimate the effective annual yield and future value of a single deposit based on the interest rate, time period, and compound frequency
APY Calculator
Calculate the Annual Percentage Yield (APY) and project your growth.
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What Is APY?
APY stands for Annual Percentage Yield. It shows how much interest a deposit earns over one year after accounting for compounding. Unlike a simple interest rate, APY reflects how often interest is added to the balance.
For example, two accounts may advertise the same rate, but the one that compounds daily will usually produce a higher APY than one that compounds annually. APY makes those differences visible so returns can be compared fairly.
What Is an APY Calculator?
An APY calculator estimates the effective annual yield and future value of a single deposit based on the interest rate, time period, and compound frequency you choose. Instead of guessing how compounding affects growth, the calculator applies standard financial math instantly.
This calculator is designed for savings accounts, certificates of deposit (CDs), and other interest-bearing accounts where deposits earn compound interest over a fixed term.
How This APY Calculator Works
This APY calculator starts with your initial deposit and applies interest based on your selected nominal rate and compound frequency. Interest is added repeatedly throughout the term, allowing each interest credit to earn interest of its own.
The term can be set in years or months, making it easy to model short-term CDs or longer savings periods. As values change, the calculator updates the effective APY, total interest earned, and future value automatically.
A growth chart shows how the balance increases over time, reflecting the actual compounding schedule used in the calculation.
APY Formula Used in This Calculator
The effective APY is calculated using this formula:
APY = (1 + r ÷ n)ⁿ − 1
In this formula:
- r is the nominal annual interest rate (as a decimal)
- n is the number of times interest compounds per year
This formula converts a stated rate into a true annual yield by factoring in compounding. The calculator then applies the same compounding logic across the full term to calculate the future value of your deposit.
Key Terms Explained
Deposit Amount
This is the amount of money you invest at the beginning of the term. Since no additional contributions are added, the entire balance grows solely through interest.
Nominal Rate
The nominal rate is the stated interest rate before compounding is applied. It does not reflect the true annual return on its own.
Compound Frequency
Compound frequency determines how often interest is added to the balance. Daily compounding results in a higher APY than annual compounding when the nominal rate is the same.
CD Term
The term shows how long the deposit earns interest. Longer terms allow compounding to work longer, increasing total interest earned.
Effective APY
The effective APY shows the real annual return after compounding. This value allows accurate comparisons between savings products.
Future Value
Future value is the final balance at the end of the term, including the original deposit and all earned interest.
Why APY is Important When Comparing Accounts
APY removes confusion when comparing savings options. It shows how interest rate and compounding frequency work together, not just the advertised rate. Even small differences in APY can lead to noticeable changes in returns over time.
This APY calculator helps estimate growth, compare scenarios, and visualize how compounding affects long-term results. Calculations are estimates, but they provide a clear picture of how interest works in real accounts.