APY Calculator
Convert a nominal rate and compounding frequency into the effective annual yield (APY).
How to use the APY Calculator
- Enter the nominal (stated) interest rate.
- Choose how often the interest compounds.
- See the effective annual percentage yield (APY).
- Compare accounts fairly, whatever their compounding schedule.
APY = (1 + rate ÷ n)^n − 1, where n is the number of compounding periods per year
About the APY Calculator
The rate a bank advertises and the rate you actually earn are not always the same number. The advertised nominal rate ignores compounding within the year; the APY — annual percentage yield — folds it in, giving the true effective return. This calculator converts a nominal rate and a compounding frequency into the APY, so you can compare a monthly-compounding account against a daily or yearly one on equal terms.
Compounding frequency is what separates the two figures. At the same nominal rate, more frequent compounding produces a slightly higher APY, because interest starts earning interest sooner. The effect is real but modest and diminishing: monthly clearly beats yearly, while daily barely edges out monthly. The tool also shows the gap, so you can see exactly what the compounding is worth.
APY is the honest number for comparing savings accounts, CDs and money-market accounts. Its mirror image on the borrowing side is APR, which represents the cost of a loan. To grow a balance over years use the compound interest calculator, and for a fixed-term deposit the CD calculator.
Frequently asked questions
What is the difference between APR and APY?
APR is the nominal rate without compounding, used for the cost of loans. APY includes compounding and shows the true yield you earn on savings. For the same nominal rate, APY is always equal to or higher than APR.
Does more frequent compounding help much?
A little, with diminishing returns. Monthly compounding noticeably beats yearly, but daily only just beats monthly. The nominal rate matters far more than the frequency.
Why does my account earn a different amount?
APY assumes the rate holds all year and nothing is added or withdrawn. Deposits, withdrawals, fees or a changing rate will shift the actual interest you receive.