APY Calculator

When a bank advertises a 6% rate, it usually means the nominal rate — 6% spread evenly across the year. But if interest is paid monthly, you receive 0.5% twelve times, and each payment starts earning interest immediately. By year end you have earned slightly more than 6%. APY captures that "interest on interest" effect and expresses it as a single, honest annual figure.

The more frequently interest compounds, the higher the APY for the same nominal rate. Annual compounding leaves APY equal to the nominal rate; semi-annual, quarterly, monthly, and daily each push it a little higher, though the gains shrink as frequency rises. This is why APY is the only fair way to compare two deposit accounts: one might quote a higher nominal rate but compound less often, leaving you worse off.

The calculator breaks out the nominal rate, the resulting APY, and the boost between them so you can see the compounding premium directly. Every figure is currency-agnostic — switch units at the top of the page.

A savings account quotes a 6% nominal rate compounded monthly. APY = ((1 + 0.06/12)^12 − 1) × 100 ≈ 6.168%. So you actually earn about 6.168% over the year, not 6% — compounding adds roughly 0.168 percentage points. If the same 6% were compounded only annually, the APY would be exactly 6%, confirming that frequency is what creates the difference.

Continuous compounding is the theoretical ceiling: its APY equals (e^r − 1) × 100, which for 6% is about 6.184% — only a hair above daily compounding. APY assumes the rate stays fixed for the full year; promotional or variable rates will not match the quoted APY if they change. Also distinguish APY (what you earn on savings) from APR (what you pay on loans): APR typically excludes intra-year compounding and may fold in fees, so the two are not interchangeable. At a 0% nominal rate the APY is also 0%, which the calculator flags as an invalid entry.