APY Calculator
Convert a nominal interest rate and compounding frequency into annual percentage yield, with one-year interest.
Independently verified for accuracy
Calculator by Toolsloft ↗- APY
- 5.12%
- Balance after 1 year
- 10511.62
- Interest earned
- 511.62
See the true annual return on a savings account or CD once compounding is included. Enter the nominal rate, how often it compounds, and a balance, and the tool shows the annual percentage yield along with the interest earned in a year. APY lets you compare accounts on equal terms.
How this is calculated
APY is calculated as (1 + r divided by n) raised to the power n, minus 1, where r is the nominal annual rate as a decimal and n is the number of compounding periods per year. This is the standard annual percentage yield definition used in US Truth in Savings disclosures. Balance and interest apply that yield to your starting amount over one year.
How to use
- Enter the nominal annual interest rate.
- Choose how many times a year it compounds.
- Enter a starting balance to see the yield and interest for one year.
Examples
- Monthly:
5% compounded monthly is a 5.12% APY - Quarterly:
4.5% compounded quarterly is a 4.58% APY
FAQ
- What is the difference between APR and APY?
- APR is the nominal rate without compounding. APY includes the effect of compounding within the year, so for the same rate a higher compounding frequency gives a higher APY.
- Why does more frequent compounding raise the yield?
- Each time interest is added it starts earning interest too. Compounding monthly credits interest more often than yearly, so the effective yield is a little higher.
- Does this include taxes or fees?
- No. It shows the yield from the rate and compounding only. Account fees or taxes on interest would reduce your actual return.