Convert a nominal interest rate to APY (effective annual yield) for any compounding frequency.
APY
How to use this tool
This is the advertised annual rate, before compounding is taken into account.
Monthly is the most common for savings; daily and continuous compound slightly more.
With those, the calculator also shows the future value and interest earned.
APY is the fair comparison between accounts — the same nominal rate with more frequent compounding gives a higher APY.
Formula & worked example
A 5% nominal rate compounded monthly: APY = (1 + 0.05 ÷ 12)^12 − 1 = 5.116%. $1,000 for one year grows to $1,051.16.
Limitations — read this before you rely on it
APY assumes the rate stays constant and interest is not withdrawn; real accounts may tier rates by balance, charge fees, or change rates. APY is not the same as APR — APR is a borrowing cost measure that may include fees, while APY measures compounding yield on savings.
Frequently asked questions
Annual percentage yield: the effective yearly return after compounding. It lets you compare savings accounts with different compounding frequencies fairly.
APR is the cost of borrowing (sometimes including fees); APY is the yield on savings including compounding. For the same rate, APY is higher when compounding is more frequent.
Because interest itself earns interest. The more often it compounds, the more of that effect fits into a year.
Only slightly: 5% nominal gives 5.116% monthly and 5.127% daily — the difference matters on large balances over long periods.
No. Account fees reduce your real return separately, so compare fees alongside APY.