APR to APY Calculator

Convert APR to APY (and APY to APR) given compounding frequency.

APR is a nominal rate; APY reflects compounding. For comparing savings products or loans with frequent compounding, APY is often the better comparison metric.

This calculator converts between APR and APY using the chosen compounding frequency.

Prefer an explanation- Read the guide.
Related definitions:aprapyinterest ratecompounding
 
%
Used to compute an implied APR from an effective annual rate.
%
 
Tip: you can type commas (e.g., 10,000).

Example

Using the default inputs, the result is:
6.168%
APR
6%
APY (optional)
0%
Compounds per year
12

How to calculate

  1. Enter APR (or APY) and compounding periods per year.
  2. Review the converted rate and the effective periodic rate.

Formula

APY = (1 + APR/n)^n - 1
  • Compounding frequency is constant.
  • APR is nominal and evenly split across compounding periods.
  • Fees are not included; they can change effective return/cost.

FAQ

Is APY always higher than APR-
If APR is positive and compounding occurs more than once per year, APY is higher because interest earns interest. If APR is 0, APY is 0.
Why do banks advertise APY for savings-
APY standardizes the effective annual yield including compounding, making products easier to compare.

Common mistakes

  • Comparing APRs with different compounding conventions.
  • Confusing APY with real return (inflation matters).
  • Ignoring fees that change effective cost/return.

Quick checks

  • Use consistent time units (monthly vs annual) when entering rates and cash flows.
  • Run a sensitivity check on the input that drives the result most (often discount rate or growth).
  • Treat the output as a decision aid, not a prediction; validate assumptions with reality.