APR to APY Calculator
Convert between APR and APY for any compounding frequency. See the true annual yield once compounding is included — useful for loans, savings, and CDs.
APY
6.168%
APR entered
6.000%
Frequently Asked Questions
What is the difference between APR and APY?
APR (Annual Percentage Rate) is the nominal yearly rate and does not account for compounding within the year. APY (Annual Percentage Yield) does account for compounding, so it reflects the true amount you'll earn or pay over a year. For the same rate, APY is always equal to or greater than APR.
How do I convert APR to APY?
Use APY = (1 + APR/n)^n − 1, where n is the number of compounding periods per year. For example, 6% APR compounded monthly equals an APY of about 6.168%.
How do I convert APY to APR?
Use APR = n × ((1 + APY)^(1/n) − 1), where n is the compounding frequency. This works backward from the effective yield to the nominal rate. Toggle the calculator above to APY → APR.
Why does compounding frequency matter?
More frequent compounding means interest is added to the balance more often, so it starts earning its own interest sooner. Daily compounding produces a slightly higher APY than monthly, which beats quarterly or annual — for the same APR.
Which rate do banks advertise?
Banks generally advertise APY for deposit accounts (savings, CDs) because it's higher and looks more attractive, and APR for loans and credit cards. Comparing APY to APY (or APR to APR) keeps the comparison fair.