Interest Rate Converter

The calculator moves a rate between periods with compound growth, never a straight multiplication. From monthly to annual, it applies (1 + monthly)^12 − 1; from annual to monthly, the inverse, (1 + annual)^(1/12) − 1. The daily figure in the table is always derived from the annual rate the same way, as (1 + annual)^(1/365) − 1. Run a number through one direction and back through the other and you get exactly what you started with — that round-trip consistency is what makes a rate genuinely effective: it is anchored to what a dollar actually becomes, not to an arbitrary period.

The size of the gap between a naive calculation and the true effective rate depends on the rate and on which way you convert. Multiply a monthly rate by 12 and you understate the annual cost, because compounding adds to it: 1% a month is 12.68% a year, not 12%. Divide an annual rate by 12 and you overstate the monthly cost, because compounding means each period needs a slightly smaller rate to reach the same annual total: a 24% annual rate is equivalent to about 1.81% a month, not 2%. The higher the rate, the wider both gaps get — at low single-digit rates the shortcut is close enough to pass unnoticed, which is exactly when it does the most damage.

The most common error is treating rates like ordinary numbers that can be added, subtracted or scaled by a simple factor. You cannot combine a monthly rate and an annual rate by multiplying one and adding the other, and averaging two periodic rates will not give a correct rate over a mixed timeframe. The only safe move is to convert everything to the same period first, using the formulas above, and only then compare offers or plug the number into another calculation. A rate with no period attached is not fully specified — "1%" means very different things per day, per month and per year.

This tool converts a rate between calendar periods — day, month, year — assuming it compounds once per period. Converting APR to APY answers a related but narrower question: given a nominal annual rate that compounds a specific number of times a year, what effective annual yield does that produce? Both use the same compounding math, and for a rate that compounds monthly, the two calculations agree. Use this page to move a known rate between periods; use an APR-to-APY conversion when you are starting from a nominal rate and a stated compounding frequency, such as a loan or deposit disclosure.

This is a pure rate conversion. It carries no information about fees, taxes, promotional terms, or how a specific lender or account actually compounds in practice. A credit card rate, a loan's APR and a savings account's APY are all built under disclosure rules that can bundle in costs beyond the bare interest math, so the effective rate calculated here may not land on a product's official figure exactly. It also assumes the rate stays constant — variable rates change, so this shows only what today's snapshot converts to. For the terms that actually govern your account, the loan agreement or deposit disclosure is the source that matters, not an estimate.