APY Calculator
Convert nominal interest rates to APY based on compounding frequency.
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APY Formula
APY = (1 + r/n)^n - 1 APY = Annual Percentage Yield
r = Annual interest rate (as decimal)
n = Number of compounding periods per year
Continuous Compounding
APY = e^r - 1 Where e ≈ 2.71828 (Euler's number)
APY by Compounding Frequency
At 5% nominal interest rate
| Frequency | Periods/Year | APY | Earnings on $10k |
|---|---|---|---|
| Annually | 1 | 5.000% | $500.00 |
| Quarterly | 4 | 5.095% | $509.45 |
| Monthly | 12 | 5.116% | $511.62 |
| Daily | 365 | 5.127% | $512.67 |
| Continuous | ∞ | 5.127% | $512.71 |
자주 묻는 질문
What is APY?
APY (Annual Percentage Yield) is the real rate of return earned on an investment or savings account, accounting for compound interest. It shows what you actually earn in a year.
How is APY different from APR?
APY includes the effects of compounding while APR does not. APY shows what you EARN on deposits; APR shows what you PAY on loans. A 5% APR compounded monthly equals 5.12% APY.
Why do banks advertise APY?
Banks advertise APY for savings accounts because compounding makes it higher than the base rate, making their rates look more attractive. APY gives customers a true picture of earnings.