Enter a rate and compounding frequency to convert between nominal APR and effective APY in either direction.

How to Use the APR to APY Calculator

Pick a direction with the APR → APY / APY → APR toggle, then enter the rate and how many times per year it compounds. The calculator updates the converted rate immediately as you type.

APR and APY answer different questions about the same loan or account. APR is the rate a lender quotes before accounting for compounding; APY is what you actually earn or pay once interest starts compounding on itself within the year. The gap between the two grows with the compounding frequency — an account that compounds daily produces a noticeably higher APY than one compounding annually, even at an identical APR.

Converting APR to APY

Nominal rate, compounding frequency, done — the formula folds the periodic rate back on itself n times a year:

APY = (1 + APR÷100÷n)ⁿ − 1

A 5% APR compounded monthly (n = 12) works out to roughly 5.12% APY. Push the same rate to daily compounding and it edges toward 5.13% — most of the compounding benefit is already captured well before daily frequency.

Going the Other Way: APY to APR

Rearranging the same relationship for APR:

APR = n × ((1 + APY÷100)^(1/n) − 1)

This is the direction worth reaching for when a bank quotes an advertised yield and you want to compare it against a different account's stated nominal rate — line both up as APR (or both as APY) before comparing, never one of each.

Why This Isn't Just a Rounding Difference

Regulation requires savings products to disclose APY and lending products to disclose APR — different laws, different audiences, same math underneath. APY flatters savers, since it's the larger of the two numbers; APR flatters borrowers on the sticker price. Neither number is wrong; they're measuring compounding from opposite sides of the same account.

Compounding frequency matters more than people expect at low rates and less than they expect at high ones. Going from annual to monthly compounding on a 2% rate barely moves the APY; the same jump on a 20% credit card rate adds well over a percentage point.