APY Calculator
Calculate the Annual Percentage Yield (APY) for savings accounts, CDs, and other investments. APY shows the total amount of interest you earn in a year, accounting for compounding.
APY Results
Rate Comparison
Add rates above to see comparison
Current Market Rates (2024)
High-Yield Savings: 4.5-5.5% APY
1-Year CD: 5.0-6.0% APY
5-Year CD: 4.5-5.5% APY
Money Market: 4.0-5.0% APY
Tip: Shop around for the best rates
Understanding Annual Percentage Yield (APY)
Annual Percentage Yield (APY) represents the total amount of interest you earn on a deposit account over one year, taking into account the effect of compounding interest. APY provides a standardized way to compare different savings and investment options.
APY vs. APR
| Aspect | APY (Annual Percentage Yield) | APR (Annual Percentage Rate) |
|---|---|---|
| Purpose | Shows total interest earned | Shows borrowing cost |
| Compounding | Includes compounding effect | May or may not include compounding |
| Usage | Savings accounts, CDs, investments | Loans, credit cards, mortgages |
| Always Higher | APY = APR (when compounding) | APR may be higher than APY |
How APY is Calculated
APY = (1 + r/n)^n - 1
Where: r = nominal interest rate, n = number of compounding periods per year
Compounding Frequencies
- Annual: Interest compounded once per year (APY = APR)
- Semi-Annual: Interest compounded twice per year
- Quarterly: Interest compounded four times per year
- Monthly: Interest compounded twelve times per year
- Daily: Interest compounded 365 times per year
- Continuous: Interest compounded infinitely (theoretical maximum)
Impact of Compounding Frequency
More frequent compounding results in higher APY because interest is earned on interest more often. The difference becomes more significant with higher nominal rates.
| Compounding | 5% Nominal Rate | 10% Nominal Rate |
|---|---|---|
| Annual | 5.00% | 10.00% |
| Quarterly | 5.09% | 10.38% |
| Monthly | 5.12% | 10.47% |
| Daily | 5.13% | 10.52% |
Current High-Yield Savings Rates
| Account Type | Average APY | Minimum Deposit | Best For |
|---|---|---|---|
| High-Yield Savings | 4.5-5.5% | $0-$100 | Emergency funds |
| 1-Year CD | 5.0-6.0% | $500-$2,500 | Short-term savings |
| 3-Year CD | 4.5-5.5% | $500-$2,500 | Medium-term goals |
| 5-Year CD | 4.5-5.5% | $500-$2,500 | Long-term savings |
| Money Market | 4.0-5.0% | $0-$10,000 | Liquid savings |
FDIC Insurance
Most savings accounts and CDs are FDIC-insured up to $250,000 per depositor, per institution. This protects your money even if the bank fails.
- Coverage: Up to $250,000 per depositor, per bank
- Joint Accounts: Up to $250,000 per person
- Multiple Accounts: Separate coverage for different account types
- Online Banks: Same FDIC protection as traditional banks
Choosing the Right Account
- Emergency Fund: High-yield savings with easy access
- Short-term Goals: 1-2 year CDs with competitive rates
- Long-term Savings: 3-5 year CDs for higher rates
- Regular Deposits: Accounts with no minimum balance requirements
- High Balance: Consider CD laddering for large amounts
CD Laddering Strategy
CD laddering involves buying multiple CDs with different maturity dates. This strategy provides liquidity while maintaining higher interest rates.
- Example: Buy 1-year, 2-year, 3-year, 4-year, and 5-year CDs
- Benefits: Access to funds each year, higher average rates
- Risk: Interest rate risk if rates decline
- Management: Reinvest maturing CDs at current rates
Tip: APY is the most accurate way to compare savings and investment options. Look beyond the nominal rate and calculate the APY to see the true earning potential. Rates can change, so shop around regularly for the best deals.