About apy calculator
The annual percentage yield (APY) is the true yearly return once compounding is counted.
Formula
APY = (1 + r/n)ⁿ − 1. A 7% nominal rate compounded quarterly gives an APY of 7.19%.
Why it matters
Two deposits with the same nominal rate can pay different amounts if they compound at different frequencies.
A worked example
A 7 percent nominal rate gives an APY of 7.12 percent when compounded half-yearly, 7.19 percent quarterly and 7.23 percent monthly. Daily compounding gives about 7.25 percent. The gains are small, but they add up on large deposits.
Compare deposits
Two deposits with the same advertised rate can pay differently. Convert both to APY before deciding which is better.
Reading bank offers
In India banks usually quote the nominal rate on deposits and compound quarterly. Converting to APY lets you compare them with offers that compound monthly or pay out at maturity.
