1. What is APY?

APY (Annual Percentage Yield) represents the real rate of return on your savings, accounting for compound interest that accrues over time. It's a more accurate measure than simple interest rate.

2. How Does the Calculator Work?

The calculator uses the APY formula:

Where:

• \( r \) — Annual interest rate in decimal form (e.g., 0.0365 for 3.65%)
• 365 — Number of compounding periods per year (daily compounding)

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

3. Importance of APY Calculation

Details: APY helps compare different savings accounts by showing the true earning potential, accounting for compounding frequency. Higher APY means more earnings.

4. Using the Calculator

Tips: Enter the annual interest rate in decimal form (e.g., 0.0365 for 3.65%). The calculator assumes daily compounding (365 times per year).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between APR and APY?
A: APR doesn't account for compounding, while APY does. APY gives a more accurate picture of your potential earnings.

Q2: Why does Marcus use daily compounding?
A: Daily compounding means interest is calculated on your balance each day, leading to slightly higher returns than monthly or annual compounding.

Q3: How often is interest paid in Marcus accounts?
A: Marcus pays interest monthly, though it compounds daily for higher overall returns.

Q4: Does the APY calculation include fees?
A: No, this is a pure mathematical calculation. Marcus accounts have no monthly fees, so APY represents actual earnings.

Q5: How does this compare to other high-yield savings accounts?
A: Marcus is competitive, but always compare APYs (not just rates) when evaluating savings accounts.