APY Calculator
Calculate Annual Percentage Yield (APY) from APR, or calculate APY from principal and interest earned. Compare compounding frequencies.
Annual Percentage Yield (APY)
5.1162%
Effective annual rate with monthly (12/yr) compounding
Future Value
$10,511.62
Total Interest
$511.62
Total Deposits
$10,000.00
APY Formula
Where = nominal APR (decimal), = compounding periods per year
APR 5% ā APY by Compounding Frequency
| Frequency | APY | Interest on $10,000/yr |
|---|---|---|
| Daily | 5.1267% | $512.67 |
| Weekly | 5.1246% | $512.46 |
| Monthly(selected) | 5.1162% | $511.62 |
| Quarterly | 5.0945% | $509.45 |
| Half-Yearly | 5.0625% | $506.25 |
| Yearly | 5.0000% | $500.00 |
APY vs APR
APR = nominal annual rate (does not account for compounding)
APY = effective annual rate (includes compounding effect)
APY is always ā„ APR. The more frequent the compounding, the larger the gap.
How to Use
- 1
Choose APR ā APY mode or Interest ā APY mode
- 2
Enter the nominal APR and select compounding frequency
- 3
Optionally enter principal, years, and regular deposits
- 4
View APY, future value, and comparison across frequencies
Examples
Good Examples
6% APR compounded monthly
APY = (1 + 0.06/12)^12 - 1 = 6.1678%5% APR compounded daily
APY = (1 + 0.05/365)^365 - 1 = 5.1267%Interest earned to APY
$50 interest on $1,000 over 1 year = 5.0000% APYBad Examples
Confusing APR with APY
A 5% APR is not the same as 5% APY when interest compoundsIgnoring compounding frequency
Two accounts at the same APR can yield different APYsCommon Mistakes
- Confusing APY with APR ā APR does not account for compounding
- Ignoring compounding frequency ā more frequent compounding yields higher APY
- Comparing APY across different terms without adjustment
- Forgetting about account fees that reduce effective yield
Frequently Asked Questions
What is the difference between APY and APR?
APR is the nominal annual rate that does not account for compounding. APY includes the effect of compounding and is always equal to or higher than APR. Use APY to compare savings accounts and CDs.
Which compounding frequency is best?
More frequent compounding yields a slightly higher APY. The difference between monthly and daily compounding on a 5% APR is only about 0.01%, but it can matter on large balances over long periods.
Can APY be negative?
In theory, APY is always ā„ 0 for positive interest rates. In practice, some accounts may charge fees that effectively reduce your yield below zero.
How do I calculate APY from interest earned?
Use the formula: . For example, 1,000 over 365 days gives an APY of 5%.