APY Calculator
Calculate the Annual Percentage Yield from a nominal interest rate and compounding frequency.
About this calculator
Banks advertise a nominal annual rate, but the return you actually earn depends on how often that rate compounds within the year, so two accounts quoting the same nominal rate can pay out meaningfully different amounts if one compounds daily and the other annually, a difference the nominal rate alone doesn't reveal. This calculator converts a nominal rate into its Annual Percentage Yield using APY = (1 + nominal rate ÷ n)^n − 1, where n is the number of compounding periods per year, then projects the maturity value and total interest on a deposit of your chosen size and holding period at that rate. An optional monthly contribution field extends the projection into a full year-by-year balance breakdown, useful for modeling a savings account you're actively adding to rather than a single lump-sum deposit. Since APY already bakes in the compounding effect, it's the correct number to compare across savings accounts, CDs or fixed deposits quoting different compounding frequencies, rather than comparing their nominal rates directly, which would understate accounts that compound more often.
Worked example
5% nominal rate, compounded daily
Result: APY ≈ 5.13%
How to use this
- 1Enter the nominal (stated) annual interest rate your bank advertises.
- 2Enter how many times per year interest compounds (12 for monthly, 365 for daily, 4 for quarterly).
- 3Optionally enter a deposit amount and time period to see the actual maturity value, then read the effective APY.
Troubleshooting
The APY shown is higher than the nominal rate I entered.
That's expected, APY always reflects the effect of compounding, so it's equal to or higher than the nominal rate, the more frequent the compounding, the bigger the gap.
Why does daily compounding barely beat monthly compounding?
Compounding frequency has diminishing returns, going from monthly to daily typically adds only a small fraction of a percent to the effective APY, since there's a mathematical ceiling (continuous compounding) that more frequent compounding approaches but never exceeds.
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