APY Calculator
Convert a nominal (stated) interest rate into its annual percentage yield (APY) — the true yearly return once compounding is included. Compare accounts with different compounding frequencies on equal footing.
About this calculator
A bank quotes savings and CD accounts by a nominal rate, but that number alone hides how often interest gets added to the balance, and interest earned on interest is what separates two accounts with the same headline rate. This calculator applies the standard compound-interest formula, raising one plus the nominal rate divided by the number of compounding periods to the power of those periods, subtracting one, and converting the result to a percentage, to produce the annual percentage yield: the effective return you would actually earn over a full year. Compounding more frequently at the same nominal rate always pushes the yield higher, because each smaller slice of interest starts earning its own interest sooner, though the gains from moving beyond monthly or daily compounding taper off quickly.
Use this to compare a 5% rate compounded monthly against a 5.05% rate compounded annually on equal footing, since only APY reflects what actually lands in the account. The result assumes the rate holds steady for the full year and ignores account fees, minimum-balance penalties, and taxes, all of which can eat into the real return a nominal-versus-effective comparison alone won't reveal.
Financial Disclaimer
This calculator is for educational purposes only and does not constitute financial advice. Results are estimates based on the inputs provided. Consult a qualified financial advisor before making investment or financial planning decisions.
Inputs
Results
Annual percentage yield (APY)
5.1162%
How to Use This Calculator
- Enter the nominal (stated) interest rate on the account.
- Choose how often interest compounds.
- The APY is the true annual return, letting you compare accounts fairly.
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How the result changes with Nominal interest rate
| Nominal interest rate | Annual percentage yield (APY) |
|---|---|
| 10% | 10.4713% |
| 35% | 41.198% |
| 65% | 88.3265% |
| 90% | 138.178% |
How this is calculated
Worked example, using the default values
- apy((1 + (nominalRate / 100) / compoundsPerYear) ^ compoundsPerYear - 1) * 100((1 + (nominalRate / 100) / compoundsPerYear) ^ compoundsPerYear - 1) * 100 = 5.11618978817
Engine last updated . Checked against 1 independently-derived test — how we verify calculators.
Frequently Asked Questions
Why isn't the nominal rate the same as APY?
The nominal rate only states the base annual percentage before compounding is applied, while APY accounts for interest being credited and then itself earning interest within the year. Whenever compounding happens more than once a year, APY comes out higher than the nominal rate, and the gap widens as compounding frequency increases.
Does switching from monthly to daily compounding matter much in practice?
It raises the yield, but only by a small fraction of a percentage point for typical savings-account rates, since the marginal benefit of adding more compounding periods per year shrinks quickly once you're already compounding monthly. The much bigger jump happens between annual and monthly compounding, not between monthly and daily.
Can I use this to compare a savings account against a CD with a different term?
Yes for the annual rate of return itself, but remember that a CD locks your money away for its full term and often penalizes early withdrawal, while a savings account stays liquid — APY tells you which pays more per year, not which is the better fit for when you might need the cash.
Does a higher APY always mean more money in my pocket?
Only if the account has no fees, minimum-balance requirements, or promotional rate that drops after an introductory period, none of which this calculator accounts for. A slightly lower advertised APY on a fee-free account can easily out-earn a higher one weighed down by monthly maintenance charges.
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