APY Calculator
Find annual percentage yield from a nominal rate.
12 = monthly, 365 = daily
Results update as you type.
How it works
APY, the annual percentage yield, is the real rate of return on savings or investments once compounding is included, and this calculator finds it from a nominal rate and how often interest compounds. You enter the stated nominal interest rate and the number of compounding periods per year, and it returns the APY. The difference between the nominal rate and the APY comes entirely from compounding: when interest is added to your balance and then itself earns interest, your effective yearly return is higher than the simple nominal rate suggests. The more frequently interest compounds, monthly, daily, or continuously, the greater this boost, though the gains shrink at higher frequencies. For example, a 5 percent nominal rate compounded monthly yields about 5.12 percent APY. Banks are generally required to advertise savings accounts and certificates of deposit using APY precisely because it reflects the true earnings and lets you compare products with different compounding schedules fairly. When comparing two accounts, the one with the higher APY earns more, regardless of how their nominal rates and compounding differ. Note that APY describes what you earn on savings, whereas APR describes borrowing costs. Enter the nominal rate and compounding frequency to compute the APY.
APY = (1 + r/n)ⁿ − 1
Annual percentage yield equals one plus the nominal rate divided by the number of compounding periods per year, raised to the power of that number of periods, minus one. It captures the effect of compounding, so the more often interest compounds, the higher the APY for the same nominal rate. APY is the true annual return on savings.
Source:Finance (effective annual rate)
We review all our tools from time to time to ensure accuracy.
Worked example
How to use this calculator
- 1
Enter your values
Enter nominal interest rate and compounds per year.
- 2
Adjust the options
Fine-tune any options to match your situation.
- 3
Read your result
Annual percentage yield updates instantly as you type — no button to press.
Frequently asked questions
What is APY?
APY, or annual percentage yield, is the effective annual rate of return on savings once compounding is taken into account. It is always equal to or higher than the nominal rate, because compounding earns interest on interest. APY lets you compare savings accounts and certificates of deposit fairly, regardless of their compounding frequency.
How is APY different from the nominal rate?
The nominal rate is the stated annual interest rate before compounding, while APY includes the effect of compounding within the year. Because interest earns interest, the APY exceeds the nominal rate whenever interest compounds more than once a year. The gap widens with more frequent compounding, so APY is the truer measure of what you earn.
How does compounding frequency affect APY?
More frequent compounding raises the APY for the same nominal rate, because interest is added and starts earning sooner. Monthly compounding beats annual, and daily beats monthly, though each step adds progressively less. At a 5 percent nominal rate, annual compounding gives 5 percent APY while daily gives about 5.13 percent.
What is the difference between APY and APR?
APY, annual percentage yield, measures what you earn on savings including compounding, while APR, annual percentage rate, measures the cost of borrowing and typically excludes compounding effects. Savings products advertise APY to show earnings, and loans quote APR to show costs. They are related but used for opposite sides of interest.
Why do banks advertise APY?
Banks are generally required to quote APY for deposit accounts because it reflects the true annual return including compounding, allowing consumers to compare accounts on equal terms. Two accounts with the same nominal rate but different compounding would mislead if compared on nominal rate alone; APY makes the real earnings clear and comparable.