APY Calculator (Annual Percentage Yield)
Turn an interest rate and compounding into APY.
Inputs
Use this calculator on your own site
Free embed
- Two lines of HTML, unlimited views
- Shows a small CalculateEveryday bar, with a credit link under the calculator
Formula
APY = (1 + r ÷ n)ⁿ − 1, where r is the stated yearly rate and n is how many times a year interest compounds
The annual percentage yield is the interest actually earned over a year as a share of the opening deposit. Each compounding adds interest to the balance that the next period then earns on, so the yield creeps above the stated rate — more so the more often it compounds. This is the regulation's own definition applied to a 365-day term.
Worked example
A 5% rate compounded monthly is an APY of 5.1162%. On $10,000 that is about $512 of interest in a year rather than the $500 the stated rate suggests.
Where this can give the wrong answer
- Compounded once a year, APY and the stated rate are identical. The gap only opens with more frequent compounding.
- Going from monthly to daily compounding adds very little: at 5% it moves the APY from 5.1162% to 5.1267%. How often interest compounds matters far less than the rate itself.
- APY describes savings. The matching figure for a loan is APR, which is defined differently and includes fees — the two should not be compared directly.
FAQ
- APY. It puts accounts with different compounding schedules on the same footing, which is why US banks are required to disclose it.
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