APY Calculator

1. Enter the nominal interest rate, the headline rate the account advertises.
2. Choose how often it compounds: daily, monthly, quarterly or annually.
3. Read the APY, and add a deposit to see the interest it would earn in a year.

Each output means something specific:

APY, the annual percentage yield, is the effective yearly return on a deposit after compounding is taken into account. Because interest is added several times a year and then earns interest itself, the real return is a little higher than the nominal rate the bank quotes. APY captures that difference in a single, comparable number.

It is the savings counterpart to the borrowing world APR. Where a nominal rate ignores how often interest is added, the APY reflects it, which is why regulators require it on savings products so customers can compare accounts fairly.

It compounds the periodic rate for one year and subtracts the original amount, leaving the true yearly growth as a percentage.

In symbols the yield is APY = (1 + r/n)^n - 1 where r is the nominal annual rate as a decimal and n the number of compounding periods a year. The more frequent the compounding, the larger the gap between the APY and the nominal rate.

1. Divide the nominal rate by the number of periods a year.
2. Add one, raise it to the number of periods, and subtract one.
3. Read the result as the annual percentage yield.

With annual compounding the APY equals the nominal rate, since there is only one period.

Take a 5 percent nominal rate compounded monthly. The monthly rate is 0.05 / 12, and over 12 months the yield is (1 + 0.05/12)^12 - 1 = 0.0512, an APY of about 5.12 percent.

On a 10,000 deposit that is about 512 in a year, compared with 500 at the plain 5 percent, so compounding adds roughly 12. Switch to daily compounding and the APY nudges up to about 5.13 percent, a tiny further gain.

With annual compounding, the same 5 percent stays 5 percent APY, because the interest is only added once.

These three rates are easy to mix up, yet each answers a different question.

For savings, always compare accounts by APY, not the nominal rate. To see any of these as a plain figure, the percentage calculator helps.

Only two things set the APY, but the frequency effect surprises many savers.

The Nominal Rate

A higher stated rate raises the APY directly, and it is the larger of the two levers by far.

Compounding Frequency

Daily compounding beats monthly beats annual, though the extra gain shrinks as you add periods and at low rates.

Rate Tiers and Changes

Some accounts pay different rates on different balances or change the rate over time, which shifts the real yield.

Fees and Tax

Account fees and tax on interest reduce what you actually keep, so the net yield can be lower than the APY.

Comparing Savings Accounts

Two accounts with the same nominal rate can yield differently; the APY settles which pays more.

Checking a Bank Quote

Confirm that an advertised APY matches the nominal rate and compounding the bank states.

Estimating Yearly Interest

Turn an APY and a balance into the interest you would earn over a year for budgeting.

1. Comparing Accounts by Nominal Rate

Compounding differs between accounts, so compare by APY, which already includes it.

2. Confusing APY with APR

APY is what you earn on savings; APR is what you pay on borrowing. They are not interchangeable.

3. Ignoring Fees and Tax

The APY is gross. Account fees and tax on interest lower the amount you keep.

4. Assuming a Fixed Rate Lasts Forever

Promotional rates and variable accounts can change, moving the real yield.

5. Overvaluing Extra Frequency

At low rates the jump from monthly to daily compounding is tiny, so do not chase it alone.

The formula is exact for a fixed rate and frequency, but a real account can differ in ways it cannot see.

APY, the annual percentage yield, is the real yearly return on savings once compounding is counted. It is always at least the nominal rate and higher when interest compounds more often.

APY = (1 + r/n)^n - 1, where r is the nominal annual rate as a decimal and n is the number of compounding periods per year. This calculator applies it for you.

The interest rate is the stated nominal rate, while the APY includes the effect of compounding. APY is the number to compare savings accounts by.

APY is what you earn on savings and includes compounding. APR is the yearly cost of borrowing and includes fees. One is for saving, the other for borrowing.

Generally yes, since a higher APY means a higher real return. Just check for fees, minimum balances and whether the rate is promotional or permanent.

More frequent compounding raises the APY, so daily beats monthly beats annual. The extra gain is larger at higher rates and small at low ones.

No. APY is a gross yield. Account fees and any tax on the interest reduce what you actually keep, so the net return can be lower.

Compounded monthly, a 5 percent nominal rate gives an APY of about 5.12 percent. Compounded daily it is about 5.13 percent, and annually it stays 5 percent.

No. The calculation runs in your browser, and nothing you enter is sent anywhere unless you Save a result, which stays on this device only.

• Annual percentage yield (Wikipedia).
• Compound interest calculator (U.S. SEC Investor.gov).
• Compound interest explained (Maths Is Fun).