Annual percentage yield calculator

Use our annual percentage yield (APY) calculator to determine the potential earnings or growth of an investment over a year. 

Page written by Ashlyn Brooks. Last reviewed on March 4, 2025. Next review due October 1, 2026.

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Annual Percentage Yield is a finance metric used by businesses to understand how much interest an investment or savings account will earn over time. Unlike a simple interest rate, APY considers the effects of compounding, providing a better picture of your actual earnings.

How to use our APY calculator

Our APY Calculator simplifies the process of estimating returns on savings and investments. Follow these steps to determine your APY:

  1. Enter the initial deposit – Input the amount you plan to invest or save.
  2. Set the annual interest rate (APR) – This is the rate your financial institution offers.
  3. Select the compounding frequency – Choose from daily, monthly, quarterly, or annually.
  4. Define the investment term – Enter how long you plan to keep your money invested.
  5. View your results – The calculator will display your future investment value, total interest earned, and APY.

What is APY?

APY, or Annual Percentage Yield, reflects the total interest earned on an investment or savings account over a year, considering the effects of compounding. The higher the compounding frequency, the greater the APY. This metric is useful for comparing financial products, as it gives a more accurate representation of potential earnings than a simple interest rate.

APY vs. APR: What’s the difference?

While Annual Percentage Rate (APR) and Annual Percentage Yield (APY) are related, they serve different purposes:

  • APR represents the basic interest rate applied to a loan or deposit, without factoring in compounding.
  • APY accounts for compounding interest, making it a more precise measure of actual earnings over time.

For example, if two savings accounts offer the same APR but one compounds interest daily and the other annually, the account with daily compounding will have a higher APY, leading to greater earnings.

APY formula: How to calculate annual percentage yield

APY is calculated using the following formula:

Where:

  • r = Annual interest rate (APR)
  • n = Number of compounding periods per year

For example, if a savings account offers 2.32% APR with daily compounding (365 periods per year), the APY would be slightly higher than 2.32% due to the frequent application of interest.

Frequently asked questions 

How do I calculate my APY?

You can calculate APY using Swoop’s APY Calculator to get quick and accurate results. Simply enter your interest rate, compounding frequency, and investment term to see your projected earnings.

Why is APY important?

APY helps businesses compare financial products the right way. Since it includes compounding, it gives a deeper picture of potential returns than a simple interest rate. This is especially useful when comparing savings accounts, fixed deposits, or investment opportunities.

Is APY monthly or yearly?

APY is Yearly. APY is always expressed as an annual percentage, though the interest may be compounded daily, monthly, or at other intervals. The more frequently interest is compounded, the higher the APY.

How much interest does $10,000 earn in a year?

The interest you earn on $10,000 depends on the APY and compounding frequency. if an account offers 0.61% APY, a $10,000 deposit would earn approximately $61 in interest over a year. On the other hand, a high-yield savings account with a 4.75% APY would have a higher return at $475 interest over the year it was earned.

Use our APY calculator today

Whether you’re saving for the future or comparing investment options, understanding APY can help you make smarter financial decisions. Try Swoop’s APY Calculator to see how your money can grow.

Disclaimer

The APY Calculator is for informational purposes only and provides estimates based on the inputs provided. Actual earnings may vary depending on factors such as compounding frequency, account terms, and financial institution policies. This tool does not constitute financial advice, and users should consult with a financial professional or their bank to confirm exact interest calculations before making investment decisions. Swoop is not responsible for any discrepancies or financial decisions based on the calculator’s results.

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