APY Calculator
Use this free APY Calculator to calculate Annual Percentage Yield from an annual interest rate and compounding frequency. APY helps compare the effective yearly return of interest-bearing accounts.
Calculate APY
1-Year Deposit Breakdown
What Is APY?
APY stands for Annual Percentage Yield. It represents the effective annual rate earned on a deposit when the effect of compounding is included. APY can make it easier to compare interest-bearing financial accounts with different compounding schedules.
The advertised interest rate alone does not always show the full effect of compounding. For example, an account that compounds interest monthly can produce a slightly higher effective annual yield than the stated nominal rate.
Why APY Matters
APY is commonly used when comparing savings accounts, certificates of deposit, money market accounts, and other interest-bearing products. A higher APY can potentially produce more interest over time, assuming other account terms are similar.
When comparing financial products, also consider fees, minimum balances, withdrawal restrictions, introductory rates, and whether the advertised APY is variable or fixed.
Frequently Asked Questions
What is the difference between APR and APY?
APR generally represents a stated annual rate, while APY reflects the effect of compounding on an annual basis.
Does more frequent compounding increase APY?
For a positive nominal interest rate, more frequent compounding generally increases the effective annual yield.