APY Calculator
This APY calculator allows you to calculate your APY and compare multiple savings accounts to decide where to put your money next. Enter the annual interest rate, choose the compounding frequency (weekly, monthly, quarterly, annually), and the calculator will do the rest.
What Is APY and Why Does It Matter
APY (Annual Percentage Yield) is the real rate of return earned on a deposit account over a year, taking compounding into account. It’s more accurate than just looking at the “interest rate,” which may not reflect how often interest is added to your account balance.
Understanding APY is critical for anyone comparing high-yield savings accounts, certificates of deposit (CDs), money market accounts, or even annuities that guarantee interest. The higher the APY, the faster your money grows—but only if the terms are favorable.
Our Favorite Rates To Grow Your Money
These are our preferred accounts because the savings, money market, and CDs only require $1 to open. This allows you to spread out risk in case a bank or credit union closes in the future. The fixed annuity offers one of the highest interest rates, provides penalty-free annual withdrawals for liquidity, and typically has a longer term than a CD.
| Term | Savings Account | Institution | APY |
|---|---|---|---|
| N/A | Money Market Account | SkyOne Federal Credit Union | 4.16% |
| N/A | Savings Account | Northpointe Bank | 4.30% |
| 6 Months | CD | Merrick Bank | 4.16% |
| 12 Months | CD | NexBank | 4.55% |
| 2 Years | Fixed Annuity | Oceanview Harbourview MYGA | 5.15% |
| 5 Years | Fixed Annuity | Wichita National | 6.40% |
Disclaimer: This is a comparison review. The Annuity Expert is not associated with a bank or credit union. We aim to help you find the highest interest rates for your savings. We may receive a small referral fee if you purchase something using a link in this guide.
1. Compare Online Banks, Not Just Local Branches
How it works: Online banks and credit unions often offer higher APYs than brick-and-mortar institutions because they have fewer overhead costs.
- Pros: Often among the highest APYs on savings and CDs.
- Cons: No physical locations for in-person service.
- Who needs it: People comfortable with managing finances online.
- Who doesn’t need it: Those who prefer face-to-face banking or cash deposits.
2. Use Real-Time Rate Comparison Tools
How it works: Use our aggregate and update APYs across multiple financial institutions in real time.
- Pros: Save time, avoid manual research.
- Cons: Rates may not include local credit union offers.
- Who needs it: Rate shoppers and comparison seekers.
- Who doesn’t need it: People already committed to a long-term product or loyalty banking.
3. Understand the Fine Print: Minimum Balances and Tiered Rates
How it works: Many high APYs apply only to specific balance tiers or require monthly activity (like direct deposits or spending thresholds).
- Pros: Some accounts offer tiered incentives for higher balances.
- Cons: Failure to meet criteria means a lower APY or no interest at all.
- Who needs it: Disciplined savers with predictable banking activity.
- Who doesn’t need it: People who keep low balances or have irregular income.
4. Compare Different Financial Products: Savings vs. CDs vs. Annuities
| Product Type | Typical APY | Unique Features |
|---|---|---|
| High-Yield Savings | Variable | Daily liquidity, but subject to rate changes |
| Money Market Accounts | Variable | Higher limits and check-writing privileges |
| CDs (Certificates of Deposit) | Fixed | Locked rates, terms from 3 months to 5+ years |
| Fixed Annuities (MYGAs) | Fixed | Tax-deferred, multi-year lock-in, no FDIC but insurer-backed |
- Who needs MYGAs: Savers seeking tax deferral and higher fixed APYs without market risk.
- Who doesn’t need MYGAs: Those needing full liquidity before the surrender period ends.
5. Use Annuities With Fixed Interest Rates For Higher Guaranteed Returns
How it works: Multi-Year Guaranteed Annuities (MYGAs) offer fixed APYs over 3-, 5-, 7-, or 10-year terms. Unlike bank CDs, the growth is tax-deferred until withdrawn.
- Pros: Higher guaranteed APYs, tax-deferred growth, and can be used inside IRAs or funded with cash.
- Cons: Withdrawals before maturity may trigger surrender charges and tax penalties (if under age 59½).
- Who needs it: Those who won’t need access to the funds and want predictable, higher growth.
- Who doesn’t need it: Investors seeking flexible access or FDIC insurance.
Compare fixed annuity interest rates and confirm how each contract credits and compounds interest.
6. Watch for Introductory “Teaser” Rates
How it works: Some banks advertise promotional APYs that drop significantly after a few months.
- Pros: Short-term rate boosts.
- Cons: Often not sustainable; long-term yield is much lower than advertised.
- Who needs it: Short-term savers who plan to move money again soon.
- Who doesn’t need it: People looking for consistent returns over time.
7. Factor In Taxes on Interest
How it works: Interest from savings accounts, CDs, and money markets is taxed annually as ordinary income. MYGAs, however, are tax-deferred until withdrawn.
- Pros of tax deferral: Grow your account faster without annual tax drag.
- Cons: Distributions are taxed as ordinary income when taken.
- Who needs it: People in higher tax brackets or those planning for retirement.
- Who doesn’t need it: People in very low tax brackets or those needing short-term liquidity.
Additional Insurance That Can Enhance or Protect Your Growth
- Fixed Indexed Annuities (FIAs): Provide the opportunity for higher earnings based on index performance (e.g., S&P 500), with a guaranteed minimum rate and no downside risk. FIAs often include a 1-year fixed interest account if you prefer a declared APY.
- Life Insurance with Cash Value: Some permanent policies offer competitive tax-deferred growth via whole life or indexed universal life insurance. Ideal for legacy planning and tax-advantaged accumulation.
- Long-Term Care Annuities: Use part of your interest to fund future long-term care needs while still earning a reasonable APY.
Who Should Compare APYs
- Savers who want to beat inflation
- Retirees looking for guaranteed interest
- IRA owners seeking tax-deferred income growth
- Conservative investors avoid the stock market risk
Who Shouldn’t Focus Solely on APY
- Those with high liquidity needs
- People prioritizing market growth over guarantees
- Tax-exempt investors (Roth IRA savers) where APY is less relevant
Final Thoughts
The best APY isn’t always the highest headline number—it’s the most efficient return after taxes, fees, and liquidity needs are factored in. Comparing APYs across banks, credit unions, and annuities ensures you don’t leave yield on the table.
Speak to The Annuity Expert
We’re a licensed annuity broker and insurance agency. We’ll help you compare fixed annuities, MYGAs, and other interest-bearing options to find the highest guaranteed APY based on your goals—at no cost to you.
→ Contact us now for free quotes and guidance on maximizing your APY.
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APY Calculator Questions From Our Readers
What is an annual percentage yield?
Annual percentage yield (APY) is a financial term that represents the total interest earned on a savings account or investment over a year, including compound interest. It factors in the effects of compounding, allowing investors to compare various investment options accurately. In essence, APY indicates the actual return on investment, accounting for the frequency at which interest is added to the account.
What is APY in banking?
APY, or Annual Percentage Yield, is a measure used in banking to calculate the total interest earned on a savings account or investment over a year, taking into account compounding. It is a key factor for customers to compare the earning potential of different financial products. APY reflects the actual return on investment and is typically higher than the simple interest rate.
How do you calculate APY?
To calculate APY (Annual Percentage Yield), use the formula: APY = (1 + (interest rate/n)) ^ n – 1. Here, “interest rate” is the annual interest rate, and “n” represents the number of compounding periods per year.
How does APY work per month?
APY, or annual percentage yield, represents the total amount of interest earned on an investment in a year, including compound interest. To determine the APY per month, divide the annual percentage yield by 12.
What is an APY calculator saving?
An APY calculator is a useful tool for determining the annual percentage yield on a savings account. By entering the account balance and interest rate, the calculator can provide an estimate of the total interest earned over a year. This helps individuals make informed decisions regarding their savings goals.
How does APY work?
APY, or Annual Percentage Yield, calculates the total amount of interest earned on a savings account or investment over a year. It takes into account compound interest, which means that the interest is added to the account balance regularly, allowing the interest to earn interest. APY provides a more accurate measure of the real return on an investment compared to simple interest.
What does 5% APY mean?
A 5% APY (Annual Percentage Yield) represents the rate of return earned on an investment or deposit over a year, including compound interest. It is a competitive interest rate that can be found in high-yield savings accounts or certificates of deposit (CDs), offering a higher return compared to traditional savings accounts.