APY Calculator
Convert between APR and APY, and compare compounding frequencies.
Inputs
%
Results
APY
5.116%
APY by Compounding Frequency
Annually5.000%
Semi-Annually5.062%
Quarterly5.095%
Monthly5.116%
Daily5.127%
Formula
APY = (1 + APR/n)^n - 1
Where APR = stated annual rate, n = compounding periods per year. APY represents the true annual yield including the effect of compounding.
Worked Example
APR: 5% | Compounding: Monthly
APY = (1 + 0.05/12)^12 - 1 = 5.116%
When to Use This Calculator
Use to compare savings accounts or CDs that compound at different frequencies. APY gives the true comparable rate.
Important Assumptions
- Rate is fixed for the year.
- No fees or early withdrawal penalties.
Common Mistakes to Avoid
- Comparing APR across accounts without converting to APY first.
- Assuming APR and APY are the same — they differ whenever compounding frequency is greater than 1.
Frequently Asked Questions
Is APY always higher than APR?
Yes, whenever interest compounds more than once per year. With annual compounding, APY equals APR.
Which compounding frequency is best?
Daily compounding yields the most, but the difference from monthly is very small. More important is the stated APR/APY itself.
Related Calculators
Methodology: This calculator uses standard financial formulas documented above. All calculation engines are unit-tested for accuracy.View full methodology
Disclaimer: This calculator provides estimates for educational purposes only. Results do not constitute financial advice.Full disclaimer