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.
APR vs APY: how compounding changes the effective rateCapital budgeting hub: NPV, IRR, payback, and investment decisionsInterest expense: definition, formula, and how to calculateLoan amortization: how monthly payments and total interest work
%
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
- Enter APR (or APY) and compounding periods per year.
- 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.
Related calculators
Finance
Deferred Revenue Rollforward Calculator
Bridge billings to recognized revenue by rolling deferred revenue forward for a period.
Finance
Break-even Revenue Calculator
Estimate the revenue needed to break even given fixed costs and gross margin.
Finance
NPV Calculator
Calculate net present value (NPV) from initial investment, annual cash flow, years, and discount rate.
Finance
IRR Calculator
Estimate internal rate of return (IRR) for an investment using yearly cash flows.
Finance
Discounted Payback Period Calculator
Estimate discounted payback period using a discount rate (and compare to simple payback).
Finance
Cash Runway Calculator
Estimate runway from cash balance, revenue, gross margin, and operating expenses (optionally with revenue growth).
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.