APY Calculator

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Options — balance
$
APY — effective annual yield
Interest in 1 year — on the balance
Balance after 1 year — balance + interest

APY — annual percentage yield — is the true yearly return on savings once compounding is counted. A nominal rate is the headline number; APY is what you actually earn after interest compounds and starts earning its own interest. This calculator converts a nominal rate and a compounding frequency into the APY using (1 + i/n)ⁿ − 1, and, if you enter a balance, shows the interest earned in a year and the ending balance. APY is the honest figure for comparing savings accounts and CDs.

How to Calculate APY

A nominal rate and a compounding frequency.

1

Enter the nominal rate

Type the headline annual interest rate the account quotes, before compounding.

2

Choose compounding

Select how often interest is credited — daily, monthly, quarterly or annually.

3

Read the APY

See the effective yield, and add a balance to see the interest earned in a year.

Why APY Is Higher Than the Nominal Rate

Compounding quietly lifts your real return.

The nominal rate assumes interest is paid once, at year end. In reality most accounts credit interest monthly or daily, and each credit immediately starts earning interest itself — so by the end of the year you have earned a little more than the headline rate. APY is that "little more" baked in: the single annual figure equal to all the compounding steps combined. A 5% nominal rate compounded monthly is really a 5.116% APY.

The catch worth remembering is that frequency has diminishing returns — the leap from annual to monthly compounding dwarfs the gain from monthly to daily. So when you compare accounts, compare the APY, not the nominal rate, and do not overweight a "compounds daily" badge if the underlying rate is lower.

Frequently Asked Questions

What is APY?
APY, or annual percentage yield, is the real rate of return on savings once compounding is taken into account. A nominal rate tells you the headline percentage, but if interest compounds monthly or daily, each credit of interest starts earning its own interest, so the amount you actually gain over a year is slightly higher than the nominal rate suggests. APY captures that: it is the single figure that, applied once a year, produces the same growth as the nominal rate compounding many times. Because it standardises for compounding, APY is the honest number for comparing savings accounts and CDs. This calculator turns a nominal rate and a compounding frequency into the APY, and everything runs in your browser.
What is the APY formula?
APY = (1 + i ÷ n)ⁿ − 1, where i is the nominal annual rate as a decimal and n is the number of times interest compounds per year. Take a 5% nominal rate compounded monthly: i is 0.05 and n is 12, so APY = (1 + 0.05 ÷ 12)¹² − 1, which works out to about 5.116%. The more frequently interest compounds, the larger n is and the higher the APY climbs above the nominal rate, though with diminishing returns — the gap from annual to monthly is much bigger than from monthly to daily. This calculator applies the formula for whichever compounding frequency you select and shows the resulting APY.
What is the difference between APR and APY?
APR and APY both annualise an interest rate, but APR ignores compounding while APY includes it — so for the same account APY is always equal to or higher than APR. APR, the annual percentage rate, is typically used for what you pay on loans and credit cards and states the nominal rate plus certain fees, without compounding the interest. APY, the annual percentage yield, is used for what you earn on savings and reflects compounding, so it shows the true growth. When you are earning interest, APY is the number to compare; when you are borrowing, APR is the standard, though the interest you actually pay on a revolving balance compounds much like APY. This tool computes the earning side — the APY from a nominal rate.
Does more frequent compounding always mean more money?
Yes, but the extra gain shrinks quickly as compounding gets more frequent. Moving from annual to monthly compounding noticeably raises the APY; moving from monthly to daily adds only a sliver more, and continuous compounding — the theoretical limit — is barely above daily. That is because each step credits interest a little sooner, but the incremental head start gets tiny. In practice the compounding frequency matters far less than the rate itself: a higher nominal rate compounded annually will usually beat a lower rate compounded daily. Use the frequency selector to match your account, but focus your comparison on the APY figure, which already bakes the frequency in.
How much interest will I earn in a year?
Enter a balance in the optional field and the calculator multiplies it by the APY to show the interest earned over one year, plus the ending balance. For example, $10,000 at a 5% nominal rate compounded monthly earns an APY of about 5.116%, which is roughly $511.60 of interest in a year, leaving $10,511.60. This is a one-year snapshot at a fixed rate and does not add further deposits — to project regular saving over several years, use our Future Value or Compound Interest calculators, which compound a stream of contributions. The APY figure here is what you would compare across savings accounts to see which pays more on the same balance.

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