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Annual Percentage Yield (APY)
How to Use
- Enter your nominal annual interest rate (%).
- Select the compounding frequency (e.g., Annually, Semiannually, Quarterly, Monthly, Daily).
- Click 'Calculate APY' to see your actual annual yield.
Tips
- The more frequently interest compounds, the higher your APY will be compared to the nominal rate.
- Always compare financial products using APY rather than the nominal rate, as APY gives you the true picture of your earnings or costs.
Calculation Method
What is APY?
The Annual Percentage Yield (APY) is a normalized representation of an interest rate, based on a compounding period of one year. It allows for a reasonable, single-point comparison of different offerings with varying compounding schedules. The more frequently interest is compounded, the higher the APY will be compared to the nominal rate.
Mathematical Formula
The formula for calculating APY is:
APY = (1 + r/n)^n - 1
- r = r = Nominal Annual Interest Rate (decimal)
- n = n = Number of Compounding Periods per Year
