APY Calculator
Convert a nominal annual interest rate into APY and estimate one year of compounded interest.
Content updated July 31, 2026
Assumes the rate and balance stay unchanged for one year, interest remains deposited, and no fees, taxes, deposits, or withdrawals occur.
Annual percentage yield (APY) expresses what a balance earns over one year after within-year compounding. It makes rates with different compounding frequencies easier to compare on the same annual basis.
Enter the nominal annual rate and how often interest compounds. The calculator shows the effective yield plus an illustrative one-year balance, assuming the money and all interest remain deposited.
The APY formula
APY = [(1 + r/n)ⁿ − 1] × 100%r = nominal annual rate as a decimal · n = number of compounding periods per year.
Worked example
At a 5% nominal annual rate compounded monthly, APY = (1 + 0.05/12)¹² − 1 ≈ 5.116%. A $10,000 balance earns about $511.62 in the modeled year.
Assumptions, rounding, and limitations
Assumptions
- The nominal annual rate remains fixed for one year.
- Principal and credited interest stay deposited.
- Compounding periods are equal.
Rounding: APY is displayed to three decimal places; money is displayed using the selected currency's normal precision.
Limitations
- Does not model fees, taxes, deposits, withdrawals, tiered rates, stepped rates, or special account terms.
- It is not a substitute for the institution's legally required APY disclosure.
Sources
- Appendix A to Regulation DD — Annual Percentage Yield Calculation — U.S. Consumer Financial Protection Bureau
Why APY can exceed the nominal rate
When interest compounds more than once a year, each interest credit can earn interest during later periods. The APY captures that effect; the nominal rate by itself does not.
For example, a 5% nominal rate compounded monthly produces about 5.116% APY. Fees, changing rates, tiered balances, or withdrawal requirements can make an account's disclosed APY differ from this simplified constant-rate calculation.
Frequently asked questions
▶What is APY?
APY is the effective annual yield after compounding. It expresses the one-year return as a percentage, assuming principal and interest remain in the account.
▶How is APY different from APR?
In this calculator, the nominal annual rate does not include within-year compounding, while APY does. Product disclosures can be governed by specific legal definitions.
▶Does daily compounding pay much more than monthly?
Usually only slightly at ordinary rates. Rate level and time generally matter more than the difference between monthly and daily compounding.
▶Does this include account fees or taxes?
No. It models a fixed rate and compounding frequency only, with no fees, tax, transactions, or rate changes.
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Open calculator →Disclaimer: APY Calculator results are estimates for general information and education only, and are not financial, tax, legal or medical advice. Verify important decisions with a qualified professional.