APR ↔ APY Converter

How to Use This APR ↔ APY Converter

1. Enter the Rate (%) — the interest rate you want to convert
2. Enter the number of Compounds per year (1 = annually, 4 = quarterly, 12 = monthly, 365 = daily)
3. Click APR → APY to convert Annual Percentage Rate to Annual Percentage Yield
4. Click APY → APR to convert Annual Percentage Yield back to Annual Percentage Rate

How APR and APY are Calculated (Formulas)

APR to APY: APY = (1 + APR ÷ m)^m — 1
APY to APR: APR = m × [(1 + APY)^1/m — 1]

Where m = number of compounding periods per year

Real Examples

Example 1 — Monthly Compounding (Standard):

• Rate: 6% | Compounds: 12 (monthly)
• APR (6%) → APY = 6.17% (earns more due to compounding)
• APY (6%) → APR = 5.84% (lower nominal rate)

Example 2 — Daily Compounding (High-Yield Savings):

• Rate: 5% | Compounds: 365 (daily)
• APR (5%) → APY = 5.13%

Example 3 — Annual Compounding (No Difference):

• Rate: 8% | Compounds: 1 (annually)
• APR (8%) → APY = 8% (same with annual compounding)

APR vs APY — What’s the Difference?

Concept	Meaning	Use Case
APR	Annual Percentage Rate — simple interest, no compounding	Loans, mortgages, credit cards (borrowing)
APY	Annual Percentage Yield — includes compounding effects	Savings accounts, CDs, investments (earning)
Key Insight	APY is always higher than APR when compounding frequency > 1

Why Use This APR ↔ APY Converter?

• ✅ Compare Rates Accurately — APY shows true return, APR shows nominal rate
• ✅ Multiple Compounding Frequencies — Annually, quarterly, monthly, daily
• ✅ Bidirectional Conversion — Convert both ways (APR→APY and APY→APR)
• ✅ Free & Unlimited — No signup required
• ✅ Mobile Friendly — Responsive design for phones, tablets, and desktops

APR to APY Reference Table (Monthly Compounding)

APR (%)	APY (%) (Monthly)	Difference
3.00%	3.04%	+0.04%
4.00%	4.07%	+0.07%
5.00%	5.12%	+0.12%
6.00%	6.17%	+0.17%
7.00%	7.23%	+0.23%
8.00%	8.30%	+0.30%
9.00%	9.38%	+0.38%
10.00%	10.47%	+0.47%

Frequently Asked Questions

Why is APY higher than APR?

APY includes the effect of compounding — earning interest on interest. With monthly compounding, 6% APR becomes 6.17% APY because each month’s interest earns additional interest in subsequent months. More frequent compounding = larger difference.

Which is better for savings — APR or APY?

For savings accounts, look at APY. APY shows your actual annual return including compounding. A bank advertising “5% APR monthly compounding” actually pays 5.12% APY — that’s what you’ll earn.

Which is better for loans — APR or APY?

For loans, compare APR. APR includes fees and the nominal rate. However, be aware — credit cards advertise APR but charge interest daily (compounding). Your effective rate is higher than the stated APR.

How does compounding frequency affect returns?

For a 6% rate:
– Annual (1×): 6.00% APY
– Quarterly (4×): 6.14% APY
– Monthly (12×): 6.17% APY
– Daily (365×): 6.18% APY
Difference between monthly and daily is small — focus on rate, not just frequency.

What compounding frequency do different products use?

Savings accounts: Daily or monthly compounding
CDs (Certificates of Deposit): Daily, monthly, or quarterly
Mortgages: Monthly compounding (APR includes fees)
Credit cards: Daily compounding (APR stated, but daily rate = APR÷365)

Related Investment Calculators

• Quick APY Calculator — Calculate investment growth with APY
• APR Calculator — Calculate Annual Percentage Rate
• Compound Interest Calculator — Exact future value with compounding
• Simple APR ↔ APY Converter — Alternative version
• Retirement Calculator — Plan retirement savings

Disclaimer: This APR ↔ APY converter provides accurate mathematical conversions. Actual financial products may include fees, compounding variations, or other factors not captured here. Always read product terms and consult a financial advisor for important decisions.