APY calculator
Enter a nominal annual interest rate and a compounding frequency to get the real Annual Percentage Yield (APY) -- the one-year return you actually earn once compounding is applied -- plus a table comparing that same rate across every compounding option.
The advertised rate before compounding is applied (sometimes called the APR).
How often the bank credits interest.
Annual Percentage Yield (APY)
5.1267%
Difference from nominal rate
+0.1267%
5% nominal grows to 5.1267% actual
Same rate, every compounding frequency
| Compounding | APY at 5% nominal |
|---|---|
| Daily (365/yr) | 5.1267% |
| Monthly (12/yr) | 5.1162% |
| Quarterly (4/yr) | 5.0945% |
| Semi-annually (2/yr) | 5.0625% |
| Annually (1/yr) | 5.0000% |
| Continuously | 5.1271% |
How APY is calculated
Annual Percentage Yield restates a nominal annual rate as the actual one-year return once compounding is applied:
APY = (1 + r/n)n − 1
where r is the nominal annual rate as a decimal and n is the number of times per year interest compounds -- 365 for daily, 12 for monthly, 4 for quarterly, 2 for semi-annually, or 1 for annually. As n grows without bound, that formula converges to continuous compounding, e^r − 1. The gap between APY and the nominal rate exists because interest credited early in the year itself starts earning interest before the year is out; annual compounding has no such gap, since there's only one crediting event.
This is the same apy() function that powers the "effective annual yield" figure on this site's compound interest calculator, exposed here as its own tool for the case where you just have a rate and a compounding frequency and want the yield, without needing a deposit amount or a time horizon.
Worked example
A 5% nominal annual rate, compounded daily -- a realistic rate for a high-yield savings account or CD in 2026:
| Nominal annual rate (r) | 5% |
| Compounding periods per year (n) | 365 |
| Periodic rate (r/n) | 0.013699% |
| APY = (1 + r/365)^365 − 1 | 5.1267% |
On $10,000, that 0.1267% gap between the nominal rate and the APY is worth about $12.67 extra in the first year alone, purely from how the same 5% is credited. Plug the same rate into the calculator above with "Daily" selected and it lands on the same 5.1267% to four decimal places.
Frequently Asked Questions
Why is my APY higher than the interest rate my bank advertised?
Because the advertised "interest rate" is usually the nominal rate (an APR-style figure) -- what you'd earn in a year if the bank only applied interest once, at the end. APY is the real one-year return once compounding is folded in: APY = (1 + r/n)^n − 1. At 5% nominal compounded daily, that works out to 5.1267% APY -- a small but real gap that grows with the nominal rate and with how often the account compounds.
Does the compounding frequency change my APY by much?
Less than most people expect once you're past monthly. At 5% nominal: annual compounding gives exactly 5.0000% (no gap at all, since there's only one compounding period), monthly gives 5.1162%, daily gives 5.1267%, and continuous compounding -- the theoretical limit as compounding gets infinitely frequent -- caps out at 5.1271%. The jump from annual to monthly is the one that matters; daily to continuous is a rounding error.
Is APY the right number to compare two savings accounts?
Yes -- it's specifically designed for that. Two accounts can quote the same nominal rate at different compounding frequencies (or different nominal rates entirely), and APY restates both on the same one-year footing so they're directly comparable. U.S. banks are required by Regulation DD to disclose APY on savings and CD accounts for exactly this reason.
For the full picture with a deposit amount, contributions and a time horizon, see the compound interest calculator, the savings interest calculator, or the daily compound interest calculator. Figures on this page are estimates for general education, not investment or tax advice.