Introduction
APY and APR are two ways to talk about interest rates, but they are not the same thing. APY (Annual Percentage Yield) includes the effect of compounding, which means you earn interest on your interest. APR (Annual Percentage Rate) does not include compounding. Because of this difference, APY is always equal to or higher than APR for the same loan or savings account.
This APY to APR calculator converts between the two rates. Just enter your rate, pick how often interest compounds, and hit calculate. The tool works both ways: you can convert APY to APR or APR to APY. It also shows you a step-by-step breakdown of the math, a comparison across different compounding frequencies, and a growth projection if you enter a starting balance.
Use this calculator to understand the true cost of a loan, compare savings accounts, or check what a credit card's APR really means once compounding kicks in.
How to Use Our APY to APR Calculator
Enter your interest rate and compounding details below to instantly convert between APY and APR. The calculator will show your converted rate, a step-by-step solution, a growth projection, and a comparison across all compounding frequencies.
Choose your conversion direction. Pick "APY → APR" if you know the APY and want the APR. Pick "APR → APY" if you know the APR and want the APY.
Use a quick preset or enter your rate. Click a preset button like High-Yield Savings or Credit Card APR to load common values. Or type your own rate into the rate field. You can also drag the slider to set the rate.
Select a compounding frequency. Choose how often interest compounds each year. Common options are Daily and Monthly. Pick "Custom" if you need to type in a specific number of compounding periods per year.
Press the Calculate button. Your converted rate will appear right away. A full step-by-step breakdown of the math will also show below the result.
Enter a starting balance (optional). Type in a dollar amount to see how your money would grow over 1, 3, 5, and 10 years based on the effective APY.
What Is the APY to APR Calculator?
This calculator converts between APY (Annual Percentage Yield) and APR (Annual Percentage Rate). These two numbers both describe interest, but they work differently. Knowing the difference helps you compare bank accounts, loans, and credit cards fairly.
APY vs. APR: What's the Difference?
APR is the simple interest rate for one year. It does not include the effect of compounding. APY is the total amount of interest you actually earn or owe in one year after compounding is added in. Because compounding means you earn interest on top of interest, the APY is always equal to or higher than the APR.
What Is Compounding?
Compounding is when a bank adds interest to your balance, and then you start earning interest on that new, larger balance. The more often this happens, the more your money grows. For example, daily compounding adds interest 365 times a year, while monthly compounding adds it 12 times. More compounding periods create a bigger gap between APR and APY.
How the Conversion Works
To go from APY to APR, the formula takes the APY and reverses the compounding effect. The key formula for discrete compounding is:
APR = n × [(1 + APY/100)1/n − 1] × 100
Here, n is the number of times interest compounds per year. For continuous compounding, the formula uses a natural logarithm instead. To convert in the other direction, from APR to APY, the formula applies compounding forward rather than removing it.
When You Need This Conversion
- Comparing savings accounts: Banks may show APY on one product and APR on another. Converting them to the same measure lets you see which one truly pays more.
- Understanding loan costs: Mortgages and credit cards often list an APR. Converting to APY shows you the real cost of borrowing after compounding.
- Checking advertised rates: Some ads highlight whichever number looks better. This tool helps you see the full picture.
Why Compounding Frequency Matters
The same APR produces a different APY depending on how often interest compounds. A 5% APR compounded daily gives a higher APY than 5% compounded monthly. That is why this calculator lets you pick the compounding frequency. Common choices include daily (used by most savings accounts), monthly (used by many CDs and loans), and quarterly.