APY Calculator
Convert a nominal rate and compounding frequency into the effective annual yield (APY).
Best for: Use it to compare savings accounts, CDs or fixed deposits quoted with different compounding, or to convert an APR into the yield you will actually earn.
Purpose: Convert a nominal rate and compounding frequency into the effective annual yield (APY).
Input
Result
EstimateAPY (effective yield)
5.116%
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- Type
- Industry Standard
- Method
- Industry-standard method
- Confidence
- High
Uses the standard formula and conventions the industry relies on.
Explore scenarios
Same nominal rate — more frequent compounding raises the APY.
APY is the effective yield you can compare across accounts. It is always equal to or greater than the nominal rate; the two are equal only when interest compounds once a year.
- Inflation often matters more than expected over the long run.
- Small rate changes can significantly affect total outcomes.
- Long-term consistency usually beats short-term timing.
Small, consistent changes compound: time in the market usually beats timing the market.
How it's calculated & sources
Free & no sign-up · runs entirely in your browser. Results are estimates for general information, not professional advice — verify important decisions with a qualified expert. Last reviewed June 2026.
How it works
APY = (1 + r/n)n − 1 — r = nominal annual rate (APR), n = compounding periods per year. APY is the true yield once compounding is included.
Example
5% compounded monthly → (1 + 0.05/12)12 − 1 = 5.116% APY.
Frequently asked questions
What's the difference between APR and APY?+
APR is the nominal annual rate before compounding; APY is the effective yield after compounding within the year. APY is always equal to or higher than APR, and the gap widens with more frequent compounding.
Why do banks advertise APY?+
Under U.S. Truth in Savings rules, deposit accounts quote APY so savers can compare accounts on equal terms regardless of how often each compounds.
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