Savings & Banking

APY Calculator

Two accounts with the same rate can pay different amounts depending on how often they compound. APY (annual percentage yield) folds compounding in, so it's the number to compare. Enter a rate and frequency to see the true yearly yield.

Formula shown below · Tested against worked examplesHow we verify

Nominal interest rate

Compounding frequency

Balance (optional)

To see the yearly interest at this APY.

Annual percentage yield (APY)

4.59%

Nominal rate: 4.5%
Compounding boost: 0.09%
Interest in year one: $459

Compare scenariosTry three values of one input

Vary

APY Calculator results for three values of Nominal interest rate
Nominal interest rate
Annual percentage yield (APY)	4.13%	4.59%+0.47%	5.06%+0.94%
Nominal rate	4.05%	4.5%+0.45%	4.95%+0.9%
Compounding boost	0.08%	0.09%+0.02%	0.11%+0.04%
Interest in year one	$413	$459+$47	$506+$94

Every other input stays at the value you set above — currently 4.5% for nominal interest rate. Differences are measured against the first column.

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How this calculator works

APY = (1 + nominal rate ÷ frequency) ^ frequency − 1. The 'compounding boost' is APY minus the nominal rate, and year-one interest applies the APY to your balance.

Real accounts may credit interest differently and can change variable rates anytime — treat the APY here as the mathematical yield for the rate and frequency you enter.

Formula

APY = (1 + r/m)^m − 1

APY: Annual percentage yield — the true yearly return
r: Nominal annual rate, as a decimal
m: Compounding periods per year

APY folds compounding in, which is why it is equal to or higher than the nominal rate and why deposit accounts must be advertised on it. The gap between monthly and daily compounding is small; the gap between two banks' headline rates is usually far larger.

What this assumes

The nominal rate and compounding frequency you enter, held constant for a year.
Savings rates are variable and follow the Federal Reserve, so an APY is what you would earn if today's rate held — not a promise.
Interest is taxable as ordinary income in the year earned unless the account is tax-advantaged.

What changes this number

The headline rate: Dominates. The difference between banks is measured in whole percentage points; compounding frequency is measured in hundredths.
Compounding frequency: Real but small — daily versus annual on a 5% rate is roughly a tenth of a point.
Rate changes: The reason to re-check annually: the account that won your business is often no longer competitive.

A worked example

Take the 4.5% monthly scenario. These figures are produced by the calculator above, not written alongside it, so they always match what the tool returns.

What you enter

Nominal interest rate: 4.5%
Compounding frequency: Monthly

What it returns

Annual percentage yield (APY): 4.59%
Nominal rate: 4.5%
Compounding boost: 0.09%
Interest in year one: $459

Sources

This calculator uses no external data — the result follows entirely from the formula above and the values you enter, so there is nothing to cite beyond the arithmetic.

Calculator last reviewed August 8, 2026. How we verify

Try an example

4.5% monthly 5% daily (HYSA)5% annually (CD)

Frequently asked questions

What's the difference between APR and APY?

APR (or nominal rate) is the simple annual rate before compounding; APY includes the effect of compounding within the year, so it's always equal to or higher than the nominal rate. For savings and CDs, APY is the honest comparison; for loans, APR is the disclosed figure.

How is APY calculated?

APY = (1 + rate ÷ n)^n − 1, where n is the number of compounding periods a year. A 4.5% rate compounded monthly gives an APY of about 4.594% — more frequent compounding raises the yield, though the gain from monthly to daily is tiny.

Why do banks advertise APY?

Federal rules (the Truth in Savings Act) require banks to disclose APY so consumers can compare accounts regardless of how often each compounds. When you shop for a savings account or CD, compare APYs, not stated rates.

What is the APY on a 5% rate compounded monthly?

5.12%. The 0.12 percentage point difference is the compounding boost, worth $512 in the first year on a $10,000 balance rather than $500. Daily compounding would add roughly another hundredth of a point — far less than the gap between two banks' headline rates.