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
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