APY Calculator
What a nominal rate really yields once compounding is counted.
The formula
APY = (1 + rate/n)n - 1
where n is the compounding periods per year. A 5% nominal rate compounded monthly yields 5.116%; daily compounding nudges it to 5.127%. The more often interest is credited, the more it earns interest on itself, with rapidly diminishing returns past monthly.
APY vs. APR
Banks quote savings in APY (looks bigger) and loans in APR (looks smaller); both are legal, standardized figures, just measured before and after compounding. When comparing accounts, compare APY to APY and the compounding frequency stops mattering, since it's already baked in.