APY Calculator
Free APY calculator: convert a nominal interest rate and compounding frequency into annual percentage yield, plus one-year earnings on your deposit.
About the APY Calculator
APY (annual percentage yield) is the interest rate you actually earn in a year once compounding is included, unlike the nominal APR banks quote. This free APY calculator applies APY = (1 + r/m)^m − 1, where r is the nominal rate and m is how many times per year interest compounds — yearly, half-yearly, quarterly, monthly, daily or continuously (e^r − 1).
The gap matters: 6% compounded monthly is really 6.17% APY, and daily compounding pushes it to 6.18%. Savers comparing bank deposits, savings accounts and money-market products in Pakistan, India or anywhere else should always compare APY to APY. Add an optional deposit amount to see the yield in money terms — interest earned and balance after one year — all computed in your browser.
How to Use the APY Calculator
- 1Enter the nominal annual interest rate the bank quotes.
- 2Select how often interest compounds (monthly and daily are most common).
- 3Optionally enter a deposit amount to see one-year earnings.
- 4Read the APY and the extra yield compounding adds.
Frequently Asked Questions
How is APY calculated with an example?
APY = (1 + r/m)^m − 1. For a 6% nominal rate compounded monthly: (1 + 0.06/12)^12 − 1 = 1.005^12 − 1 = 6.1678%. On a 100,000 deposit that is 6,167.80 of interest in a year instead of 6,000 with simple annual interest.
What is the difference between APR and APY?
APR is the nominal stated rate; APY includes the effect of intra-year compounding. A 12% APR compounded monthly equals (1.01)^12 − 1 = 12.68% APY. For loans the same concept is called the effective annual rate — the true cost is always the effective figure.
How much difference does compounding frequency make?
At 6% nominal: yearly = 6.00%, quarterly = 6.136%, monthly = 6.168%, daily = 6.183%, continuous = 6.184%. The jump from yearly to monthly matters most; beyond daily the gains are tiny. Frequency matters more at higher rates — at 20% nominal, monthly compounding yields 21.94%.
What does continuous compounding mean?
It is the mathematical limit of compounding infinitely often, computed as e^r − 1. At 6%, e^0.06 − 1 = 6.1837% — barely above daily compounding. It is mainly used in finance theory and derivatives pricing rather than retail bank products.