APY Calculator
Convert stated nominal interest rates into true Annual Percentage Yield (APY) to compare savings accounts, CDs, and investment returns accurately.
How to use the APY Calculator
- 1Enter nominal interest rate (stated APR).
- 2Select compounding frequency (daily, monthly, quarterly, semi-annually).
How APY is Calculated
APY reflects the real annualized earning rate after accounting for interest compounding on interest.
- r is nominal rate in decimal, and n is number of compounding periods per year (e.g.
- 12 for monthly, 365 for daily).
- 1APY = (1 + 0.05 / 12)^12 - 1 = 1.05116 - 1 = 5.116%
What affects APY results
- Compounding frequency (daily compounding yields higher APY than annual compounding).
Frequently Asked Questions
What is the difference between APR and APY?
APR is the nominal simple interest rate without compounding. APY takes compounding into account, representing what you actually earn or pay over a full year.
How does APY differ from nominal interest rate (APR)?
APY (Annual Percentage Yield) reflects the actual annual return including compounding effects, whereas APR does not account for intra-year interest compounding.
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