APY Calculator
Convert a nominal (stated) interest rate into the annual percentage yield you'll actually earn, and see how compounding frequency changes it. Drag the sliders and the numbers update instantly.
What is APY?
Annual percentage yield (APY) is the real rate of return you earn on a deposit in one year, including the effect of compounding. It's calculated as APY = (1 + r/n)n − 1, where r is the nominal annual rate and n is the number of compounding periods per year. Because APY folds compounding into a single number, it's the fairest way to compare savings accounts, CDs, and money market accounts.
APY vs nominal rate (APR)
The nominal rate, sometimes shown as APR on deposit products, is the stated rate before compounding. APY is always equal to or higher than the nominal rate — the more often interest compounds, the larger the gap. A 5% nominal rate compounded daily yields about 5.13% APY, so the extra is real money you actually earn.
Tip: When comparing savings accounts, always compare APY to APY. A higher nominal rate with less frequent compounding can lose to a lower rate that compounds daily.
Why compounding frequency matters
Daily compounding beats monthly, which beats annual, but with diminishing returns. The jump from annual to monthly compounding is far bigger than the jump from monthly to daily. The chart above shows exactly how much each step adds at your entered rate.