This effective annual yield calculator converts a nominal annual rate into the effective annual yield (APY), accounting for compounding. Enter the rate and compounds per year above.
Formula
EAY = (1 + r ÷ n)ⁿ − 1
Example
6% compounded monthly: EAY = (1 + 0.06/12)¹² − 1 = 6.17%.
Good to know
These results are estimates for educational purposes only and are not financial advice. Rates, fees, and terms vary — confirm figures with a licensed professional before making decisions. Last updated: August 2026.
Frequently Asked Questions
How do I calculate effective annual yield?
Raise (1 + rate/n) to the power n and subtract 1, where n is the number of compounding periods per year.
What is the difference between APR and APY?
APR is the nominal rate; APY (effective yield) includes compounding and is slightly higher.
Does more frequent compounding raise APY?
Yes. Daily compounding gives a marginally higher APY than monthly at the same nominal rate.