Calculate Effective Annual Yield (APY) from nominal rate and compounding frequency.
Effective Annual Yield (APY)
5.12%
Nominal Annual Rate
5%
Uses the compound interest yield equation APY = (1 + r/n)^n - 1 to calculate total annual interest yield earned.
1. Input the nominal annual interest rate. 2. Select the compounding interval (Daily, Monthly, Quarterly, Semi-Annually, Annually). 3. View effective APY.
APY indicates true annual return taking compounding into account. Higher compounding frequencies yield higher APY.
FAQ
Daily compounding yields slightly more than monthly compounding, maximizing the growth of interest earned on interest.
Always use APY when comparing savings accounts or CDs, as APY accounts for compounding frequency differences.
Categories · Banking & Interest