APR to APY Calculator
APR is the nominal annual rate; APY is what you actually earn or pay once compounding kicks in. Convert between the two for any compounding frequency and see how much the difference matters.
Your numbers
Result
- Rate per period
- 0.42%
- Difference (APY − APR)
- 0.12%
| Compounding | APY |
|---|---|
| Annually (1×) | 5% |
| Semiannually (2×) | 5.06% |
| Quarterly (4×) | 5.09% |
| Monthly (12×) | 5.12% |
| Daily (365×) | 5.13% |
APR and APY are answers to different questions
APR (annual percentage rate) is the nominal rate: the periodic rate multiplied by the number of periods, ignoring compounding — it's how loans are quoted under the Truth in Lending Act. APY (annual percentage yield) is the effective rate: what a dollar actually grows to in a year with compounding, the number savings accounts advertise. The formula: APY = (1 + APR/n)^n − 1, where n is compounding periods per year.
Compounding frequency changes the gap
A 5% APR is exactly 5% APY with annual compounding, 5.12% compounded monthly and about 5.13% compounded daily. The more frequent the compounding, the bigger the gap — and it grows fast at higher rates: a credit card's 24% APR compounds daily to roughly 27.1% APY. That's why the same rate looks better on a bank's savings ad (APY) than on its loan disclosure (APR).
Comparing offers the right way
Compare like with like: APY against APY for savings and CDs, APR against APR for loans — and when two products state different types, convert one of them (this calculator does either direction). Note that a loan's advertised APR may also bundle fees; the compounding math here covers the rate itself, so check the fee disclosure separately.
Informational and educational result. Not a substitute for professional advice.
Frequently asked questions
Sources
- Truth in Lending (APR) and Truth in Savings (APY) — US disclosure rules
Related calculators
Rate Conversion
Convert interest rates between periods — monthly to annual and back — using the true effective rate with compounding, not a simple multiplication by 12.
CalculateFinanceCompound Interest
See how compound interest grows your money over time, with an optional monthly contribution. Compare what you put in against what the interest adds.
CalculateFinanceCD
Calculate what a certificate of deposit (CD) is worth at maturity from the deposit, APY and term. See the interest earned and how the balance grows month by month.
Calculate