APY Calculator
Convert a nominal interest rate into the effective annual yield (APY).
APY5.116%
Yield on $10,000 / yr$511.62
APY = (1 + r ÷ n)ⁿ − 1, where r is the nominal annual rate as a decimal and n is the number of compounding periods per year. A 5% nominal rate compounded monthly gives (1 + 0.05/12)¹² − 1 ≈ 5.116% APY — slightly above 5% because interest earns interest within the year. On $10,000 that is about $511.62 in a year.
Educational estimate only — not professional financial or medical advice.
Questions
What is APY?
Annual percentage yield is the real return once compounding is included: APY = (1 + r ÷ n)ⁿ − 1. A 5% rate compounded monthly is about 5.116% APY.
Why is APY higher than the stated rate?
Because interest is added during the year and then earns more interest. The more often it compounds, the higher the APY for the same nominal rate.