Annual Percentage Yield
Convert a nominal interest rate into its effective APY.
About Annual Percentage Yield
APY reveals the true annual return once intra-year compounding is factored in, always at or above the nominal rate. More frequent compounding raises the APY. Banks advertise the nominal rate but pay the APY, so comparing APY is the honest way to shop savings products.
Formula
Annual Percentage Yield
APY = (1 + r/n)^n - 1
- r
- nominal annual rate
- n
- compounding periods per year
Worked example
With the default values below, Annual Percentage Yield returns APY of 5.116%. Change any input above and every figure here is recalculated in your browser.
Inputs used
- Nominal rateaccepts 0–100 %
- 5 %
- Compounds per yearminimum 1
- 12
Results
- APY
- 5.116%
- Growth on $1,000
- $1,051.16
- Compounding Bonus
- $1.16
Step by step
- 1Values used
- 2Annual Percentage Yield
- 3APY= 5.116
- 4Growth on $1,000= 1,051.16
- 5Compounding Bonus= 1.16
Assumptions and limits
- The result is derived only from the 2 inputs listed above. Anything not among them is not part of the calculation.
- In particular, this calculator does not take inflation, tax or fees or charges into account.
- Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
- This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.
How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.
Frequently Asked Questions
How is Annual Percentage Yield calculated?
APY = (1 + r/n)^n - 1 APY reveals the true annual return once intra-year compounding is factored in, always at or above the nominal rate. More frequent compounding raises the APY.
Why does Annual Percentage Yield matter?
Banks advertise the nominal rate but pay the APY, so comparing APY is the honest way to shop savings products.
What values do I need to enter?
This calculator takes 2 inputs: Nominal rate, Compounds per year. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.