How does compounding frequency affect APY?

More frequent compounding yields a higher APY. A 5% nominal rate gives: 5.00% APY (annually), 5.09% (quarterly), 5.12% (monthly), 5.13% (daily), and 5.13% (continuously). The difference is more significant at higher rates.

What is a good APY for a savings account?

As of 2024-2025, high-yield savings accounts offer 4.5-5.5% APY. Traditional bank savings accounts typically offer 0.01-0.5%. CD rates may be slightly higher depending on term length. Compare accounts using this calculator to find the best real yield.

Is higher APY always better?

For savings, yes — higher APY means more interest earned. However, also consider: minimum balance requirements, withdrawal restrictions, FDIC insurance, account fees, and the financial institution's stability. A slightly lower APY with no fees may be better than a high APY with conditions.

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APY Calculator

Calculate APY from nominal interest rates and compare savings accounts. See how compounding frequency affects your real returns.

Last updated: March 31, 2026

Nominal Interest Rate

Compounding Frequency

Deposit Amount (optional)

Term (optional)

months

How to Use This Calculator

Choose a mode: Calculate APY or Compare Accounts.
For single calculation: enter the nominal rate and compounding frequency.
Optionally enter a deposit amount and term to see projected earnings.
For comparison: add 2-3 accounts with their rates and compare APY side by side.

The Formula

APY = (1 + r/n)^n - 1, where r = nominal annual rate, n = compounding periods per year. Continuous: APY = e^r - 1. Reverse: r = n × ((1 + APY)^(1/n) - 1).

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Frequently Asked Questions

APR (Annual Percentage Rate) is the nominal rate without compounding. APY (Annual Percentage Yield) includes the effect of compounding. APY is always equal to or higher than APR. For savings, APY shows your true earnings; for loans, APR shows the base cost before compounding.