APY Calculator
At a 5% APR compounded monthly, a $10,000 deposit earns a 5.12% APY and grows to $10,511.62 after one year. This APY calculator converts a nominal APR and compounding schedule into the effective annual yield. It also shows how much one deposit would grow over a single year with no added money.
Quick answer
APR is the nominal yearly rate before compounding, while APY is the real yearly yield after compounding is applied.
This estimate assumes one full year at a fixed APR with no extra deposits, withdrawals, fees, or taxes.
What this tells you
- •APR is the nominal yearly rate before compounding, while APY is the real yearly yield after compounding is applied.
- •More frequent compounding usually pushes APY a little above APR, even when the stated rate stays the same.
- •Your deposit amount changes the dollar interest you earn, but it does not change the APY itself.
How to Use
- 1Enter your deposit amount for the one-year growth example.
- 2Enter the APR as a percentage, such as 5 for 5%.
- 3Choose how often the account compounds interest during the year.
- 4Calculate to see the APY, ending balance, interest earned, and rate per compounding period.
How It Works
Formula
APY = (1 + APR ÷ n)^n - 1
Ending balance = Deposit × (1 + APR ÷ n)^n
Interest earned = Ending balance - Deposit
Example: (1 + 0.05 ÷ 12)^12 - 1 = 0.051162, or 5.12% APYAPR must be converted to a decimal and divided by the number of compounding periods in the year. That smaller periodic rate is applied over and over across the full year. APY is the total one-year growth rate that falls out of that compounding math.
Calculation note: values are processed in the order shown above, using the current input units.
Worked Examples
A 5% APR savings account compounded monthly
Monthly compounding applies one-twelfth of the APR 12 times. That pushes the effective yearly yield a little above the 5% nominal rate and adds $511.62 of interest over the year.
A 4% APR CD compounded quarterly
Quarterly compounding uses a 1% rate each quarter. Four rounds of compounding lift the one-year yield to 4.06%, so the deposit earns $609.06 over the term shown here.
How 5% APR Changes With Compounding Frequency
The same nominal APR produces slightly different APYs depending on how often interest is credited during the year.
| Compounding | Periods per year | APY on 5% APR |
|---|---|---|
| Annual | 1 | 5.00% |
| Semiannual | 2 | 5.06% |
| Quarterly | 4 | 5.09% |
| Monthly | 12 | 5.12% |
| Weekly | 52 | 5.12% |
| Daily | 365 | 5.13% |
APY rises as compounding gets more frequent, but the difference gets small once you move from monthly to weekly or daily compounding.
Common mistakes
- Entering APY into the APR field, which counts compounding twice
- Assuming a bigger deposit changes the APY, when it only changes the dollar interest earned
- Comparing accounts with different fees or balance rules as if APY were the whole story
Limitations
This APY calculator assumes a fixed APR for one full year, a constant compounding schedule, and no deposits, withdrawals, fees, or taxes. Daily compounding is treated as 365 equal periods. Some banks use product-specific balance methods, promotional rates, or other rules that can change the actual yield you receive.