1. What is APY?

APY (Annual Percentage Yield) represents the real rate of return on your savings, accounting for compound interest that accrues daily. It's higher than the simple interest rate due to compounding.

2. How Does the Calculator Work?

The calculator uses the APY formula:

Where:

• \( r \) — Annual interest rate in decimal form
• 365 — Number of compounding periods per year (daily compounding)

Explanation: The formula calculates the effective annual yield when interest is compounded daily.

3. Importance of APY Calculation

Details: APY helps compare savings accounts by showing the true earning potential. A higher APY means more earnings on your deposits.

4. Using the Calculator

Tips: Enter the advertised annual interest rate (e.g., 4.25). The calculator will show the actual APY considering daily compounding.

5. Frequently Asked Questions (FAQ)

Q1: Why is APY higher than the interest rate?
A: APY includes the effect of compound interest, which makes your money grow faster than simple interest.

Q2: How often does Amex compound interest?
A: American Express personal savings accounts compound interest daily and credit it monthly.

Q3: Are there any fees that affect APY?
A: Amex savings accounts have no monthly fees, so the APY represents your actual earnings.

Q4: Is the APY guaranteed?
A: No, APY can change based on market conditions, but Amex typically offers competitive rates.

Q5: How does this compare to other high-yield accounts?
A: Amex savings often rank among the top high-yield savings accounts for their combination of competitive APY and brand trust.