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APY Calculator
Effective annual yield accounting for compounding frequency.
Enter values to see your result
Frequently asked questions
Why APY > APR?
Compounding. Interest earns interest. 12% APR compounded monthly = 12.68% APY. Daily compounding brings it to 12.75%.
Is higher APY always better (for savings)?
Yes — for same APR, higher compounding frequency = more return. For loans, higher APY = more cost.
What is continuous compounding?
Theoretical limit of infinite compounding. APY = e^r − 1. At 7% APR, continuous APY = 7.25% vs daily 7.25% (almost identical beyond daily).
Why do banks quote APY on savings?
Advertisement advantage — APY number looks higher than APR. Makes their rate seem more competitive.