Convert any nominal rate to APY in seconds — see your true yield
Rate & Compounding
The nominal rate (also called APR) is the stated interest rate before compounding. The APY (annual percentage yield) reflects the real return after compounding is applied.
Growth Projection (optional)
APY Result
Formula Used
APY = (1 + r/n)n − 1 = (1 + 0.004167)12 − 1 = 5.116190%
r = 5% nominal rate, n = 12 compounding periods/year
APY by Compounding Frequency
See how APY changes across every compounding frequency for your 5% nominal rate.
Note: APY calculations assume the stated nominal rate remains constant for the full term. Results are for informational purposes only. Actual yields may vary based on account terms, fees, and rate changes. Always verify with your financial institution.
The APY Calculator converts a nominal annual interest rate (APR) into the true annual percentage yield by accounting for compounding frequency. Whether your account compounds daily, monthly, quarterly, or continuously, APY reveals your real return. Enter your rate and frequency to compare yields instantly across all compounding schedules and see exactly how much a balance grows over any term.
APR (Annual Percentage Rate) is the stated nominal rate without factoring in compounding. APY (Annual Percentage Yield) accounts for how often interest is compounded within the year, so it reflects your actual return. APY is always equal to or greater than APR — the more frequently interest compounds, the larger the gap.
For discrete compounding, APY = (1 + r/n)^n − 1, where r is the nominal annual rate as a decimal and n is the number of compounding periods per year. For continuous compounding, APY = e^r − 1. For example, a 5% nominal rate compounded monthly gives APY = (1 + 0.05/12)^12 − 1 ≈ 5.1162%.
More frequent compounding means interest is calculated and added to the balance more often, so subsequent interest calculations earn on a slightly larger amount. Daily compounding yields slightly more than monthly, which yields more than quarterly or annually — all at the same nominal rate. The difference is small at low rates but becomes significant at higher rates.
Use APY to compare savings accounts, CDs, and investment products that compound interest, since it reflects your true earnings. Use APR when comparing loans or credit cards, where lenders are required to disclose it. For any deposit or investment decision, APY is the more meaningful number.