APY Calculator
Convert an interest rate into annual percentage yield (APY), including the effect of compounding.
%
Formula
Add the periodic rate to 1, raise it to the number of periods per year, then subtract 1.
APY = (1 + r ÷ n)n − 1
Here r is the yearly interest rate as a decimal (5% = 0.05) and n is the number of times interest compounds per year. For continuous compounding, use APY = er − 1.
Examples
| Rate | Compounding | APY |
|---|---|---|
| 5% | Monthly | 5.1162% |
| 4% | Daily | 4.0808% |
| 3% | Quarterly | 3.0339% |
| 6% | Annually | 6% |
| 5% | Continuously | 5.1271% |
Common questions
What is APY?
APY is the real yearly return on a deposit once compounding is counted. A 5% rate compounded monthly gives an APY of about 5.12%.
What is the difference between APY and APR?
APY includes compound interest and is used for savings. APR does not include compounding and is used for loans and credit cards.
Does more frequent compounding raise APY?
Yes. The more often interest compounds, the higher the APY for the same rate, though the gain gets smaller each time.