APY Calculator — Annual Percentage Yield

APY — Annual Percentage Yield — is the real, annualized return on a deposit after accounting for compound interest. A 5% nominal rate compounded monthly is a 5.1162% APY: $10,000 grows to $10,511.62 in one year, not $10,500. Under the U.S. Truth in Savings Act, banks must advertise APY, which makes it the standard apples-to-apples metric for comparing savings accounts and CDs.

APY = (1 + r/n)ⁿ − 1, where r is the stated (nominal) annual rate as a decimal and n is the number of compounding periods per year. The FDIC's Truth in Savings definition is equivalent: the total interest a $100 deposit would earn over 365 days at the stated rate and compounding frequency. This calculator uses that formula directly.

Divide the rate by the compounding frequency, add 1, raise to the power of the frequency, and subtract 1. Example: 5% nominal compounded monthly → (1 + 0.05/12)¹² − 1 = 0.051162, i.e. 5.1162% APY. Use the "Nominal → APY" tab above — it also shows the dollars earned on your balance.

Use the inverse formula r = n·((1 + APY)^(1/n) − 1). For 5.1162% APY compounded monthly: 12·(1.051162^(1/12) − 1) = 5.00% nominal. The "APY → Nominal" tab does this in one click.

APY measures what you earn on savings (yield with compounding, disclosed under the Truth in Savings Act); APR measures what you pay on borrowing (cost of credit, disclosed under the Truth in Lending Act) and generally ignores intra-year compounding. A 5% savings APY and a 5% loan APR are not comparable — they answer opposite questions. See the boundary note above.

"Interest rate" usually means the nominal (stated) rate printed in the ad — 5%. APY restates that rate with compounding — 5.1162% monthly. APY is always greater than or equal to the nominal rate; they are equal only when interest compounds once a year.

Yes, and it compounds (pun intended). At a 5% nominal rate: annual compounding gives 5.000% APY, quarterly 5.095%, monthly 5.116%, daily 5.127%. On a $10,000 balance that's $500.00 vs $512.67 per year — a $12.67 difference from frequency alone. The Compare tab ranks offers by this exact effect.

The theoretical limit as compounding gets infinitely frequent: APY = eʳ − 1 (Euler's number e ≈ 2.71828). At 5% that's 5.1271% — only 0.0004 points above daily compounding. It's a math benchmark rather than a product banks actually sell; this calculator includes it as a reference option.

For savers, usually — but check the fine print: monthly fees, minimum-balance requirements, interest earned is taxable, and teaser/introductory rates that drop after a few months. A 5.00% APY account with a $12 monthly fee can underperform a fee-free 4.60% account on small balances.

Statements disclose "APY Earned" (APYE), computed from the actual interest paid and your average daily balance over that statement period — annualized to 365 days. If your balance changed mid-cycle, APYE will differ from the advertised APY, which assumes a fixed balance for the full term.

No. This calculator is an educational tool — it projects the exact math of the numbers you type in. Real returns vary with fees, taxes, rate changes, and withdrawals. Nothing here is financial advice; consult a licensed financial professional for decisions about your money.

Yes — same concept, different name. "Effective annual rate" is the term used in finance textbooks and corporate finance; "APY" is the consumer-banking label regulated by the FDIC. The formula is identical.