Effective Annual Yield โ APY vs APR
APY = (1 + APR/n)^n - 1. More compounding = higher effective yield. Compare APY, not APR.
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Compare APY 12=monthly 365=daily HYSA 4-5%
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Why: APY is what you actually earn; APR is stated rate.
How: Enter nominal rate, compounding periods, and initial deposit.
Run the calculator when you are ready.
Effective Annual Yield โ APR to APY Conversion
Compare APY, not APR. More compounding = higher effective yield.
Sample Scenarios โ Click to Load
Rate Details
Yield Analysis
Input
Effective Rate
Earnings
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Understand compounding benefits in detail.
1. Key Takeaways
- โข APR = nominal, APY = effective
- โข Formula: APY = (1 + r/n)^n - 1
- โข Daily compounding maximizes returns
- โข Compare APY, not APR, between accounts
- โข Difference grows with higher rates
- โข HYSA typically compounds daily
2. Did You Know?
APR
Annual Percentage Rate (nominal)
APY
Annual Percentage Yield (effective)
Formula
APY = (1 + r/n)^n - 1
More compounding
Higher APY
Daily
Maximizes returns
HYSA
Usually compounds daily
3. How It Works
APY = (1 + r/n)^n - 1. r = nominal rate, n = compounding periods per year. Year-end balance = initial ร (1 + r/n)^n. Extra from compounding = compound balance - simple interest balance.
Inputs
Nominal rate (APR), compounding periods per year, initial deposit
Outputs
Effective APY, difference, year-end balance, extra earnings
4. Expert Tips
Compare APY
Not APR between accounts
Daily compounding
Maximizes returns
Higher rates
Difference grows
HYSA
Typically compounds daily
5. Comparison Table
| 5% APR | Monthly | Daily |
|---|---|---|
| APY | 5.12% | 5.13% |
6. FAQ
APR = stated rate. APY = actual yield after compounding.
Daily yields most; difference is small.
4-5% APY typical; compounds daily.
12 compounding periods per year.
Compare APY; both compound.
7. Quick Stats
12
Monthly
365
Daily
4-5%
HYSA APY
APY
Compare
8. Sources
9. Disclaimer
โ ๏ธ Warning: Estimates only. Check actual account terms. Not financial advice.
For educational purposes only โ not financial advice. Consult a qualified advisor before making decisions.
๐ก Money Facts
APY = (1 + APR/n)^n - 1
โ Finance
HYSA typical APY 2024-2025
โ Market
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