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APR ⇄ APY converter

The same headline rate earns or costs more when interest is added more often. Convert between the two in one step.

2 sources ↓
%

Result (example values pre-filled — change any field)

Result
5.116%

Quick answer

APY counts compounding; a nominal APR does not. With n compounding periods a year, APY = (1 + APR ÷ n)^n − 1. A 5% rate compounded monthly gives an APY of about 5.116%. The US Truth in Savings rules use APY for deposit accounts⁠[1].

A small pocket calculator showing zero
Photo: “Citizen SLD-100NR calculator” by LoMit, CC BY-SA 4.0 (edited: cropped, colour-graded)

#What is the difference between APR and APY?

APY (annual percentage yield) tells you what a deposit really earns in a year once interest is added to the balance and starts earning interest itself. The US Truth in Savings rules set out how banks must calculate it, including the general formula APY = 100 × [(1 + interest ÷ principal)^(365 ÷ days in term) − 1]⁠[1]. APR on a loan is a broader cost measure: the CFPB describes it as reflecting the interest rate plus points, broker fees and other charges you pay to get the loan⁠[2]. This converter treats APR as a nominal yearly interest rate with no fees, so it shows only the effect of compounding. Read APR vs APY explained for the full story.

#How do I use the converter?

Three steps

  1. Type the rate you were quoted

    For example 5 for a rate of 5%. Use the number exactly as the bank or lender states it.

  2. Pick how often interest is added

    Savings accounts often compound daily or monthly; the account terms say which. If you are unsure, try both and see how small or large the gap is.

  3. Choose the direction

    APR → APY shows what a nominal rate becomes after compounding; APY → APR goes the other way, which helps when one product quotes APY and another quotes a nominal rate.

#Which number should I compare?

For savings, compare APYs: they already include compounding. For borrowing, compare APRs of the same kind, and remember that a loan APR can include fees that this converter leaves out. If you want the monthly payment on a loan, use the loan payment calculator. The glossary entry on APR has a short definition.

The bottom line

Compounding is the whole difference between the two numbers. Convert before you compare, and check what each rate includes.

Frequently asked questions

Why is APY higher than APR?

Because interest added during the year earns interest too. With yearly compounding the two are equal.

Can I convert APY back to APR?

Yes. Choose APY → APR. The formula is APR = n × [(1 + APY)^(1/n) − 1].

Does this include loan fees?

No. A loan's disclosed APR may include fees⁠[2]; this tool only handles compounding.

Sources

  1. 12 CFR Part 1030, Appendix A — Annual Percentage Yield Calculation — eCFR (US Code of Federal Regulations), 2025 Primary
  2. What is the difference between a mortgage interest rate and an APR? — Consumer Financial Protection Bureau, 2024 Primary

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