APY Calculator

In April 2026, a good APY for a high-yield savings account is between 3.50% and 4.50%. Top-tier accounts offer 4.00% to 5.00%, though rates above 4.50% often require qualifying activity like direct deposit or have balance tiers. Anything below 3.00% in this environment is underpaying for no reason. A savings account offering less than 3.50% APY is materially underpaying you. Anything below the national 0.39% average is essentially giving your money to the bank for free.

The interest rate (nominal rate) is the base percentage the bank quotes. APY is what you actually earn after compounding over a year. A 4.00% interest rate compounded daily produces a 4.08% APY. APY is always equal to or higher than the nominal rate, and APY is the number used to fairly compare accounts. Banks are required by the Truth in Savings Act (Regulation DD) to disclose APY so consumers can make accurate apples-to-apples comparisons.

APY = (1 + r/n) to the power of n minus 1, where r is the nominal annual rate as a decimal and n is the number of compounding periods per year. For example, 4% compounded monthly gives APY = (1 + 0.04/12) to the 12th power minus 1 = 4.074%. For continuous compounding, APY = e to the power of r minus 1. The formula normalizes for different compounding frequencies, which is why APY lets you compare a daily-compounding account to a monthly-compounding account directly.

At typical savings rates (4% APY), daily compounding beats monthly by roughly $7 per year on a $10,000 balance. The difference between daily and continuous compounding is fractions of a cent. On $10,000 at 4.00% nominal rate: annual compounding earns $400.00, semi-annually $404.00, quarterly $406.04, monthly $407.42, daily $408.08, and continuous $408.11. The jump from annual to monthly is worth $7.42/year; the jump from monthly to daily is worth 66 cents. Compounding frequency is a tiebreaker between similar APY offers, not a main decision factor.

No. APY is what you earn on deposits (includes compounding effect). APR is what you pay on loans (often includes fees). Both use similar math but apply to opposite sides of the balance sheet. APY is always equal to or higher than the nominal rate because compounding works in your favor as a saver. APR on a loan typically includes fees on top of the interest rate to make the real cost visible. Never compare a savings APY to a loan APR directly — they measure different things.

Yes. CDs quote APY under the same Truth in Savings Act rules as savings accounts. The difference is that CD APY is fixed for the term, while savings APY is variable and can change at the bank's discretion. CD compounding is usually semi-annual or quarterly rather than daily, which narrows the gap between nominal rate and APY. A 4.20% nominal 12-month CD compounded semi-annually gives an APY of about 4.24%. The key trade-off: you lock in the current APY for the CD duration but sacrifice access.

Variable-APY accounts can change rates at any time. In practice, banks adjust rates within days of Federal Reserve rate changes, and sometimes in between. After the Federal Reserve's cuts in late 2025, savings yields drifted down from 2024 peaks. A 4.50% APY today can be 3.80% APY in six months if the Fed cuts rates. Check your account's current APY monthly if you're optimizing for yield. CDs lock in a fixed APY for the term, which matters in a falling-rate environment.

Yes. In the US, APY interest on savings accounts and CDs is taxed as ordinary income at your marginal federal tax rate, plus state income tax where applicable. You will receive a Form 1099-INT from your bank if you earn $10 or more in interest in a tax year. A 4.00% APY becomes effectively 2.80% after a 30% marginal tax rate. Tax-advantaged accounts (Roth IRA, HSA) change this calculation significantly. The APY a bank quotes is always pre-tax.

As of April 2026, top 12-month CD APYs are 4.00% to 4.20% and top HYSA APYs are 4.00% to 5.00%. Savings accounts sometimes beat CDs on headline rate, but CDs lock in the APY for the term while savings APY can drop. The Federal Reserve target rate sits at 3.50% to 3.75%. After the Fed's late-2025 cuts, savings yields have drifted down from 2024 peaks. If you lock in a 4.20% APY 3-year CD and rates fall to 3.00% next year, you keep earning 4.20%.

No. APY expresses the return on your principal. If you deposit $10,000 at 4.00% APY, you have $10,400 after one year: $10,000 of principal plus $400 of interest. APY describes only the $400 portion as a percentage of the starting balance. This is why a 4.00% APY means you earn $400 per $10,000 per year, not that your balance grows to 104% of the original.

As of April 2026, promotional high-yield accounts offer up to about 5.00% APY, usually with tier caps (e.g., only on the first $5,000 of balance) or direct deposit requirements. Standard HYSAs without conditions typically max out around 4.00% to 4.20%. CD specials occasionally reach 4.40% to 4.75% on specific terms. Reference points: under 1.00% APY is worth leaving; 3.50% to 4.00% is competitive; 4.50%+ is excellent but often capped; 5.00%+ is promotional or tiered.