How this calculator works
APY (annual percentage yield) is the interest rate with compounding included: what a balance actually earns in a year. It's (1 + rate ÷ n)ⁿ − 1, where n is how many times a year interest compounds. This is the formula federal Truth in Savings rules (Regulation DD) require banks to use. Enter the interest earned and days from a statement to get the APY you actually earned.
- APY = (1 + rate ÷ n)ⁿ − 1, where n = compounding periods per year (365 daily, 12 monthly, 4 quarterly).
- Continuous compounding: APY = e^rate − 1.
- APY earned (Regulation DD) = 100 × [(1 + interest earned ÷ balance)^(365 ÷ days in period) − 1].
Worked example
With these inputs: interest rate 4%; compounded Daily; balance $10,000.
The result is apy at 4.00% compounded daily 4.0808%, with extra from compounding +0.0808 percentage points and interest on the balance in a year $408.08. Banks round APY to two decimals on disclosures. A higher rate matters far more than more frequent compounding: daily vs monthly at 4% is worth under $1 a year per $1,000.
APY vs interest rate
The interest rate (sometimes called the APR on deposits) is the yearly rate before compounding. APY adds the interest earned on interest during the year, so it's what the balance really grows by. Regulation DD requires banks to quote APY on savings, money market accounts and CDs, which makes APY the right number for comparing accounts.
Compounding frequency matters less than people expect. At 4%, daily compounding beats monthly by about 7 cents a year per $1,000. The rate itself matters far more: the FDIC's national average savings rate was just 0.37% in September 2026, which is $37.00 a year on $10,000, against $408.08 at 4.00% compounded daily.
Check the APY on your statement
Regulation DD's "APY earned" formula annualizes what a statement paid. Its own example: $61.68 of interest on a $1,000 balance over 365 days is an APY earned of 6.17%. Enter the interest, the average balance and the days in the statement period to check yours.
To see what an APY does over several years with monthly deposits, use the money market calculator or the savings growth calculator; for CDs that mature on a schedule, the CD ladder calculator.
Sources
Frequently asked questions
How do I calculate APY?
APY = (1 + r ÷ n)ⁿ − 1, with r the interest rate as a decimal and n the compounding periods a year. 4% compounded daily: (1 + 0.04 ÷ 365)³⁶⁵ − 1 = 4.0808%.
What is the difference between APY and interest rate?
The interest rate ignores compounding; APY includes it. That's why APY is a little higher whenever interest compounds more than once a year, and why banks must quote APY on deposit accounts.
How much is 4% APY on $10,000?
$400.00 in a year, because APY already includes compounding. A 4% interest rate compounded daily pays slightly more: $408.08.
Is daily or monthly compounding better?
Daily, but barely: at 4% it's 4.0808% APY against 4.0742%, about 7 cents a year per $1,000. Compare APYs, not compounding schedules.
How do I work out the APY I earned?
Use the Regulation DD formula: 100 × [(1 + interest ÷ balance)^(365 ÷ days) − 1]. $61.68 earned on $1,000 over 365 days is 6.17%.