APY Calculator Definition
Related Calculators
Use these tools to compute values based on this definition.
Further Reading
Deep dive into the math and concepts with our comprehensive guides.
APR vs APY Explained
What is the difference between APR and APY? Learn when to use Annual Percentage Rate and Annual Percentage Yield when comparing loans and savings.
What is Compound Interest? Guide to Compounding Growth
Compound interest is the interest you earn on both your original money and on the interest you keep accumulating. It is the core concept behind long-term wealth building.
Core Glossary Term
Read the formal mathematical definition.
Worked Examples
Step-by-step calculations showing how to apply this concept.
Investing $500 a Month for 30 Years
This example demonstrates the power of compound interest over a long time horizon. Even though the investor only put in $180,000 of their own money, the balance grew to over $600,000 because the interest earned kept generating its own interest.
View in Calculator →Frequently Asked Questions
How does an APY calculator differ from an APR calculator?
APY focuses on the money you earn (investments/savings) and includes compounding. APR focuses on the money you owe (loans) and includes fees.
Why is compounding frequency important?
More frequent compounding (like daily vs annual) means you earn interest on your interest faster, resulting in a higher APY.