APY Calculator

An APY (Annual Percentage Yield) calculator translates a nominal interest rate and a compounding frequency into the actual annualized return you'll see on a deposit. Compounding is the engine: each time interest is paid into the account it begins earning interest itself, so a 5% nominal rate compounded monthly delivers slightly more than a flat 5% over a year.

APY is the apples-to-apples number for comparing savings accounts, certificates of deposit (CDs), money market accounts, and any other deposit product. US banks are required by Regulation DD to display APY on rate sheets, so once you know the APY you don't need to ask about compounding frequency separately — it's already baked in.

You deposit $10,000 in a savings account quoting a 5% nominal rate that compounds monthly:

• Periodic rate: 0.05 ÷ 12 = 0.004167
• APY: (1 + 0.004167)^12 − 1 = 0.05116 = 5.116%
• Year-end balance: $10,000 × 1.05116 = $10,511.62
• Interest earned: $511.62

Compare to the same 5% compounded daily: APY = 5.127%, year-end balance = $10,512.67. The extra $1.05 from daily versus monthly compounding shows why obsessing over compounding frequency rarely matters once APY is disclosed.

• Comparing high-yield savings accounts — APY is the only number that fairly ranks accounts with different compounding schedules.
• Choosing a CD — locked-in APY shows exactly what you'll earn at maturity assuming you don't withdraw early.
• Money market evaluation — tiered MMAs often pay different APYs at different balance breakpoints; this tool shows the effective yield at each tier.
• Bond and fixed-income comparison — convert a bond's nominal yield into APY for cross-product comparison.
• Reverse-engineering a teaser rate — when a bank advertises "up to 5.5% APY," check what nominal rate that implies.

• Confusing APY with APR. APY is for what you earn on deposits and includes compounding. APR is for what you pay on loans and excludes compounding.
• Ignoring tiered rates. Many high-yield accounts pay the headline APY only on balances under a cap (e.g., $10,000), with a much lower rate above that.
• Forgetting taxes. Interest is taxed as ordinary income at the federal level (and most states). A 5% APY in a 24% bracket is closer to 3.8% after tax.
• Assuming APY is locked. Most savings APYs are variable — they move with the federal funds rate. CDs are fixed; HYSAs are not.
• Skipping fees. A monthly maintenance fee or excess-transaction fee can wipe out the APY entirely on small balances.