How it works

A nominal (stated) rate ignores compounding. The APY — annual percentage yield — is the rate you actually earn once compounding is included: APY = (1 + r/n)n − 1, where r is the nominal rate and n the number of compounding periods per year.

Because APY bakes in compounding, it's the honest number for comparing savings accounts and CDs that quote different nominal rates and compounding schedules.

Worked example

A 5% nominal rate compounded monthly is really a 5.12% APY. On a $10,000 deposit that's about $512 earned in a year, versus $500 if it only compounded annually.

Frequently asked questions

What's the difference between APR and APY?
APR is a nominal rate that ignores compounding; APY includes it. For the same nominal rate, APY is always equal to or higher than APR.

Which account is better to compare on?
Always compare APY to APY — it's the true earned rate regardless of how often each account compounds.

Is the deposit field required?
No. Leave it blank to just see the APY, or enter an amount to see the dollars earned in a year.