APY Calculator & Savings Growth
Calculate Annual Percentage Yield (APY) to visualize the power of compound interest. See how contribution frequency and time affect your savings growth.
About
The Annual Percentage Yield or APY acts as a normalizing metric for savings accounts and Certificates of Deposit. While the interest rate determines the periodic payout, the APY accounts for how often that interest is added back to the principal balance. More frequent compounding results in a higher APY which means your money grows faster without additional effort. Banks often advertise the APY because it is a higher number than the nominal rate.
This tool projects the future value of your deposits by distinguishing between simple and compound interest. Long-term savings strategies rely heavily on the "interest on interest" effect. Even small differences in the compounding schedule (monthly vs. daily) can result in noticeable wealth gaps over a 10 or 20-year horizon.
Formulas
The APY is derived from the nominal rate r and compounding periods n.
Future Value FV is calculated as:
Reference Data
| Principal | Rate | Time | Compounding | Total Interest | Future Value |
|---|---|---|---|---|---|
| $10,000 | 5.0% | 10 yr | Annually | $6,288 | $16,288 |
| $10,000 | 5.0% | 10 yr | Quarterly | $6,436 | $16,436 |
| $10,000 | 5.0% | 10 yr | Monthly | $6,470 | $16,470 |
| $10,000 | 5.0% | 10 yr | Daily | $6,486 | $16,486 |