APY Calculator
The rate advertised is never the rate you actually earn — APY shows you the real number after compounding.
✓ Formula verified June 2026✓ Source: Investopedia
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Enter a rate to see APY
Worked Examples
High-yield savings account
Nominal rate: 5% compounded monthly (n = 12) → APY = (1 + 0.05/12)^12 − 1 = 5.116%. Monthly compounding adds 0.116 percentage points over the stated rate.
Certificate of deposit (daily compounding)
Nominal rate: 4.5% compounded daily (n = 365) → APY = (1 + 0.045/365)^365 − 1 = 4.603%. Daily compounding approaches continuous compounding — the theoretical maximum.
Bond paying quarterly
Nominal rate: 6% compounded quarterly (n = 4) → APY = (1 + 0.06/4)^4 − 1 = 6.136%. Use APY to compare bonds with different coupon payment schedules on an equal basis.
Frequently Asked Questions
~4 min readWhat is the difference between APR and APY?▾
APR (Annual Percentage Rate) is the nominal rate without compounding — it is what lenders advertise on loans. APY (Annual Percentage Yield) accounts for compounding frequency and represents the true annual return or cost. For savings accounts, APY tells you what you actually earn. For loans, the APR understates the true cost if interest compounds more than once a year.
Why does compounding frequency matter?▾
Each compounding event adds interest to the principal, which then earns interest itself. The more frequently this happens, the more total interest accumulates. Daily compounding produces slightly more than monthly, which produces more than annual — all at the same nominal rate.
What is continuous compounding?▾
Continuous compounding is the mathematical limit as compounding frequency approaches infinity: APY = e^r − 1, where e ≈ 2.71828. At 5% nominal, continuous compounding yields 5.127% APY — nearly identical to daily compounding (5.127%), so practical differences are negligible beyond daily.
How do I compare two savings accounts with different rates and compounding?▾
Convert both to APY using this calculator and compare the results directly. A 4.8% account compounding daily can outperform a 4.9% account compounding annually, depending on the exact numbers.
Does APY apply to loans?▾
For loans, the equivalent concept is EAR (Effective Annual Rate) or the fully-loaded APR. Lenders in many countries are required to disclose the effective cost. The formula is the same as APY — always check whether the rate quoted is nominal or effective before comparing loan offers.
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For informational purposes only. Not financial advice. Formula last verified June 2026. See our Privacy Policy for data handling.