"Let’s say you have a savings account with an APR of 2%. If interest is compounding daily, that means that there are 365 periods per year and that the periodic interest rate is .00548%.
The APY on the account would be:
(1 + 2.00/365)^365 – 1 = 2.02% APY
This is very slightly higher than an account that compounds your money once every month."