Use this APR to APY converter to instantly calculate the effective annual yield of any interest rate, based on your selected compounding frequency.
Whether you’re comparing savings accounts, credit cards, or business loans, this tool helps you understand the real cost or return.
Input: APR (%) and compounding frequency
Output: Effective APY (%)
Use it for: Comparing credit card offers, choosing savings products, or assessing business loan terms
What Is APR to APY Conversion?
APR (Annual Percentage Rate) is the yearly interest rate without compounding. APY (Annual Percentage Yield) accounts for the frequency of compounding, showing the real return or cost.
Use this converter to answer: “If my APR is 6.5% and it compounds monthly, what is my APY?”
Formula used:
APY = (1 + r/n)^n - 1
Where:
r = APR as decimal
n = compounding periods per year
Common Scenarios This Tool Solves
What is the APY if APR is 6.5% monthly?
With 12 compounding periods, your APY is approximately 6.68%.
Why is APY higher than APR?
Because APY includes the effect of compounding, it reflects more accurate cost/return.
How often do banks compound interest?
Most savings accounts compound monthly or daily. This converter supports both.
Can I compare APY across different offers?
Yes. Convert each APR to APY using the correct frequency, then compare.
| Term | Definition | Role |
|---|---|---|
| APR | Annual rate excluding compounding | Input |
| APY | Yield including compounding over a year | Output |
| Compounding Frequency | Number of times interest is compounded in a year | Input factor |
| Monthly Compounding | Compounding 12 times per year | Frequency |
| Daily Compounding | Compounding 365 times per year | Frequency |
Frequently Asked Questions
What is the difference between APR and APY?
APR is the flat annual rate. APY includes compounding and shows the true return or cost.
Which is better to compare: APR or APY?
APY gives a more accurate picture, especially when compounding is frequent.
Can I convert APY back to APR?
This tool only works one way (APR to APY). Reverse conversion is more complex.
Is this calculator suitable for credit cards?
Yes. Credit cards use APR, but often compound daily or monthly. This tool helps estimate the true cost.