Annual Percentage Yield Calculator

The nominal rate is the stated annual rate before considering compounding. APY (or effective annual rate) is the actual annual return after accounting for how often interest compounds — it's always equal to or higher than the nominal rate.

With more frequent compounding, interest is added to the balance more often, so subsequent interest calculations are based on a slightly larger balance sooner — this compounding effect increases the effective annual yield.

APY gives a fairer comparison between products with different compounding frequencies, since it reflects the actual annual return you'd earn.

Banks and lenders often quote a nominal rate, but the effective rate is what actually applies to your balance over a year — useful for comparing deposits or loans that compound at different frequencies.

Yes — the same math applies whether you're earning interest on a deposit or being charged interest on a loan; a higher compounding frequency increases the effective rate either way.