APY Calculator (Effective Annual Rate)

Enter the rate as a percent (5 for 5%). Use 12 for monthly compounding, 4 for quarterly, 2 for semiannual, 1 for annual, 365 for daily. Numbers stay in your browser. The default is 5% monthly, which is an APY of about 5.116%.

Quick answer: with the nominal rate in B2 as 5% or 0.05 and compounds per year in C2:

=EFFECT(B2,C2)
=(1+B2/C2)^C2-1

Both return the effective annual rate, often called APY when it describes a deposit account.

5% nominal, compounded monthly

The monthly rate is 0.05 ÷ 12. Over 12 months the effective rate is (1 + 0.05/12)^12 − 1. In Google Sheets on 12 November 2026, =(1+0.05/12)^12-1 및 =EFFECT(0.05,12) both returned 0.051161897881732976. Quarterly compounding, =(1+0.05/4)^4-1, returned 0.05094533691406222. Once a year, =(1+0.05/1)^1-1 returned 0.050000000000000044, which is 5%.

Enter 5% or 0.05 in the rate cell, not the whole number 5, unless you also divide by 100. A posted 5% that compounds monthly is not the same as a 5.116% rate that compounds once a year; they grow to the same amount in one year, which is the point of APY.

What this is not

This conversion does not add monthly deposits or a starting balance — that is the compound interest calculator. It is also not the Rule of 72 doubling time, and it is not a CAGR measured from two values. Bank APY disclosures can include quirks (a 365- or 360-day year, a rate that changes mid-year) that this constant-rate formula does not model. Lending APR sometimes includes fees; this page only compounds a nominal rate.

Questions that come up

What is the APY or EFFECT formula in Excel or Google Sheets?

With the nominal annual rate in B2 as 5% or 0.05 and the compounding periods per year in C2, use =EFFECT(B2,C2) or =(1+B2/C2)^C2-1. At 5% compounded monthly, both returned 0.051161897881732976, or about 5.116%.

Is APY the same as the nominal rate or as CAGR?

No. The nominal rate (sometimes called APR in consumer lending, though APR can also include fees) is the stated annual figure before compounding. APY is what you actually earn in a year when that rate is compounded. CAGR is measured from a start and end value over a number of years, not from a posted rate.

What if interest is only compounded once a year?

Then APY equals the nominal rate. In the test workbook, (1+0.05/1)^1-1 returned 0.050000000000000044, the floating-point stand-in for 5%.