Use this free APY calculator from BankBrisk to show your real annual return when interest compounds more than once per year.
APY Calculator
Calculate growth with compound interest from daily to annually
Future Balance
Growth Schedule
| Year | Start | Contrib | Interest | End |
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What Is an APY Calculator
An APY calculator shows your real annual return when interest compounds more than once per year. APY stands for Annual Percentage Yield. It reveals what you actually earn after compounding effects, which is always higher than the simple interest rate advertised. This helps you compare savings accounts and investments fairly.
Input Fields Explained for An APY Calculator
Starting Balance
Enter what you have to invest right now. This could be $5,000 from savings or $50,000 from an inheritance. The calculator shows how this amount grows with regular contributions and compound interest.
Monthly Contribution
How much do you add each month? Setting up automatic deposits of $200 or $500 makes a huge difference over time. Even small monthly amounts compound into significant wealth.
Interest Rate (APR)
This is the simple annual rate before compounding. Banks advertise APR, but it doesn’t tell the whole story. A 5% APR becomes 5.12% APY with daily compounding. The calculator converts APR to your actual APY.
Compound Frequency
How often is interest calculated and added to your balance? Daily compounding means every single day. Monthly means once per month. More frequent compounding creates higher returns because you start earning interest on interest sooner.
Years
Your investment timeline. Longer periods let compound interest work harder. The difference between 10 years and 20 years isn’t just double; it’s often three or four times more money due to exponential growth.
Reading Your Results for An APY Calculator
Future Balance
Your total amount after all growth and contributions. This includes everything—initial deposit, monthly additions, and all interest earned. It’s what you’ll actually have in your account.
Total Principal
All the money you personally deposited. Initial balance plus every monthly contribution added together. This is your cash investment before any interest.
Total Interest
Free money from compound growth. The difference between your future balance and the total principal. This number shows how hard your money worked for you.
Effective APY
Your true annual return percentage accounting for compounding. This is what you’re really earning, not the advertised APR. Use APY when comparing different accounts or investments.
Growth Schedule Table
Year-by-year breakdown showing starting balance, contributions, interest earned, and ending balance for each year. Notice how interest amounts accelerate over time even though the rate stays constant.
Growth Chart
Visual representation of your balance climbing over time. The curve gets steeper in later years because compound interest accelerates. Early years show modest growth; later years show explosive gains.
APY Calculator Formula
The calculator uses this formula: APY = (1 + r/n)^n – 1
Breaking it down:
- r = Annual interest rate (as decimal, so 5% = 0.05)
- n = Compounding periods per year (365 for daily, 12 for monthly)
- Raise (1 + r/n) to the power of n
- Subtract 1 from the result
- Multiply by 100 for percentage
Example: 5% APR compounded daily
- r = 0.05, n = 365
- (1 + 0.05/365)^365 – 1
- (1.000137)^365 – 1
- 1.05127 – 1 = 0.05127
- 0.05127 × 100 = 5.127% APY
Why APY Matters
Two accounts might both advertise 4% APR, but one compounds daily while the other compounds quarterly. The daily compounding account actually delivers 4.08% APY while quarterly gives 4.06% APY. Small difference, but over decades it adds up.
Online banks often offer higher APY than traditional banks. Moving $20,000 from a 0.5% account to a 4.5% account means earning an extra $800 annually. That’s free money just for switching.
Credit unions sometimes offer excellent APY on savings and certificates. Shop around using APY for fair comparisons. Don’t just look at APR—it’s misleading when compounding frequencies differ.
Using the Calculator
Test different compounding frequencies to see the impact. Daily versus monthly compounding on a 5% rate creates about 0.12% higher APY. On large balances over many years, this becomes thousands of dollars.
Try various monthly contribution amounts. Increasing from $200 to $300 monthly might seem small, but over 20 years that extra $100 monthly compounds into tens of thousands more.
Experiment with timeframes. See how much more you accumulate by starting 5 years earlier. Time is your biggest advantage with compound interest.
Common Scenarios
High-yield savings accounts typically offer 4-5% APY with daily compounding. These beat traditional savings paying 0.1% APY. Your emergency fund should sit in the highest APY account available.
Certificates of deposit lock your money for fixed terms but often pay a premium APY. A 5-year CD might offer 5.5% APY while a savings account gives 4.5%. Calculate whether the extra yield justifies losing liquidity.
Money market accounts balance accessibility with decent APY. They might pay 4% APY with monthly compounding while letting you write checks. Good for funds you need available but want growing.
Quick Comparison Tips
Always compare APY to APY, never APR to APY. Banks legally must disclose APY, so use that number. It already includes compounding effects.
Higher compounding frequency means higher APY from the same APR. Daily beats weekly beats monthly beats annually. But the difference shrinks at higher frequencies—daily versus weekly is tiny.
Watch for promotional rates that drop after introductory periods. A 6% APY for 3 months that becomes 2% afterward might lose to a steady 4.5% APY over your full timeline.
Maximize Results
Set up automatic monthly transfers on payday. You won’t miss money you never see. Consistency beats trying to time larger deposits.
Reinvest all interest automatically. Never withdraw earnings if possible. Every dollar of interest needs to keep compounding to reach the calculator’s projections.
Review APY rates quarterly. Banks change rates frequently. Move money if you find significantly better APY elsewhere. Even 0.5% higher APY matters long-term.
Important Limitations
The calculator assumes steady APY throughout your timeline. Real rates fluctuate with economic conditions. When rates drop, your actual returns fall below projections.
Inflation erodes purchasing power. A 5% APY looks great until you realize inflation is 3%. Your real return is only 2% after accounting for rising prices.
Taxes reduce your actual gains. Interest gets taxed as ordinary income. A 5% APY might only deliver 3.5% after taxes depending on your bracket.
Conclusion
APY reveals your true returns after compounding, helping you make smarter choices about where to keep money. Use this APY calculator to compare accounts, plan savings goals, and see exactly how compound interest builds wealth over time.