APY Calculator 2026 — APR to APY Converter

APR (Annual Percentage Rate) is the stated interest rate before compounding. APY (Annual Percentage Yield) is the effective return after compounding is applied. Example: a 4.5% APR compounded daily has a 4.603% APY — the extra 0.103% comes from earning interest on your interest throughout the year. Banks are required by the Truth in Savings Act to disclose APY on savings accounts and CDs, making APY the better number for comparing accounts.

In 2026, competitive high-yield savings accounts offer 4.0%–5.5% APY. Online banks and credit unions typically offer much higher APYs than traditional brick-and-mortar banks (which may offer as little as 0.01% APY). The FDIC average savings rate is well below 1%, so comparing institutions matters enormously. A $10,000 balance at 0.01% APY earns $1/year; at 5.0% APY, it earns $511/year — a 510× difference.

More frequent compounding gives a slightly higher APY. For a 4.5% APR: annually → 4.500% APY (no boost). Quarterly → 4.573% APY. Monthly → 4.594% APY. Daily → 4.603% APY. The differences seem small but compound significantly on large balances over time. A $100,000 balance at 4.5% APR earns $4,500 with annual compounding vs $4,603 with daily compounding — $103 more per year just from compounding frequency.

A CD with a 4.5% stated rate (APR) compounded monthly has an APY of 4.5941%. Compounded daily: 4.6028% APY. Compounded quarterly: 4.5765% APY. The APY is what you actually earn — always ask your bank for the APY, not just the rate. Federal law requires banks to quote APY for CDs and savings accounts.

The APY formula is: APY = (1 + APR/n)^n - 1, where n is the number of compounding periods per year. Example: 4.5% APR compounded monthly (n=12): APY = (1 + 0.045/12)^12 - 1 = (1.00375)^12 - 1 = 0.045941 = 4.5941%. For daily compounding (n=365): APY = (1 + 0.045/365)^365 - 1 = 4.6028%.

High-yield savings accounts in 2026 offer APYs ranging from 4.0% to 5.5%, with most compounding daily or monthly. Unlike CDs, savings account APYs are variable — they can change when the Federal Reserve adjusts interest rates. In a falling rate environment, locking in a CD rate may provide a better guaranteed return. In a rising rate environment, a high-yield savings account lets you benefit from rate increases.

Yes — interest earned in a savings account or CD (reported as APY) is taxable as ordinary income in the year it is earned, even if you don't withdraw it. Your bank issues a 1099-INT for any interest over $10. APY on tax-advantaged accounts (savings within a Roth IRA or HSA) grows tax-free. APY on 529 accounts grows tax-free when used for qualified education expenses.

A daily APY calculator converts a daily interest rate to an annual percentage yield, or calculates how much a balance earns per day. Formula: daily rate = APY / 365. Example: 4.5% APY = 0.01233% daily rate. On a $10,000 balance, that's $1.233 per day in interest. Daily compounding gives the highest APY for a given APR — it's why many online banks advertise daily compounding as a feature.