APR to APY Converter
Convert nominal rates to true yields, both directions.
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How this calculator works
APR and APY describe the same rate two different ways, and the difference is compounding. APR is the simple nominal rate: 5% APR means 5% divided across the year before compounding. APY (annual percentage yield) includes compounding, so 5% APR compounded monthly is actually 5.12% APY, you earn slightly more because each month's interest starts earning its own interest. This converter translates both directions with any compounding frequency, so you can compare a monthly-compounding savings account against a daily-compounding one apples-to-apples.
Why it matters: banks advertise the bigger number. Savings accounts quote APY (the flattering one); loans quote APR (the flattering one for them). When comparing two savings accounts, APY is the number to compare, it already bakes in compounding differences. For loans, APR is more useful because it is also required to include most fees by law, making it the better shopping number. The gap between APR and APY grows with the rate and with compounding frequency, at low rates it is pennies, at credit-card rates it is meaningful money.