APY Calculator
Convert a nominal annual interest rate to annual percentage yield and estimate how an initial deposit and monthly savings could grow.
Why APY is useful when comparing savings products
APY shows the effective return for one year after compounding is included. It gives you a common basis for comparing savings accounts, money market accounts, and certificates of deposit when their compounding schedules differ.
How APY differs from the stated interest rate
A nominal annual interest rate states the base rate before interest earns additional interest during the year. APY includes that compounding effect. At a positive rate, APY is equal to the nominal rate with annual compounding and slightly higher with more frequent compounding.
APR is commonly used for borrowing costs, while APY is the usual comparison measure for deposit accounts.
APY formula
For a fixed nominal annual rate compounded in equal periods, APY is:
APY = (1 + r / n)n − 1
Here, r is the nominal annual interest rate as a decimal and n is the number of compounding periods per year. The calculator multiplies the decimal result by 100 to display a percentage.
Example: 5% nominal rate on $10,000
| Compounding | APY | Interest after one year |
|---|---|---|
| Annually | 5.000% | $500.00 |
| Monthly | 5.116% | $511.62 |
| Daily | 5.127% | $512.67 |
The initial deposit affects the dollar interest earned, but not the APY calculated from a fixed nominal rate and compounding frequency.
What the projection assumes
- The nominal interest rate remains fixed for the full savings period.
- Earned interest remains deposited and continues to compound.
- Monthly contributions are made at the end of each month.
- There are no fees, withdrawals, taxes, balance tiers, or promotional rate changes.