APY vs APR Calculator
Convert between APR and APY for any compounding frequency. Understand what the two rates really mean.
APR is the simple yearly rate. APY is what you actually earn or pay once compounding is included.
Banks quote APY on savings because it looks bigger. Lenders quote APR on loans because it looks smaller.
How it works
To go from APR to APY, divide the APR by the number of compounding periods, add one, raise to that power and subtract one.
Going the other way reverses those steps.
The formula
n = compounding periods a year.
Tips
- Compare savings accounts on APY and loans on APR. Never mix the two.
- Credit card APRs compound daily, so the real yearly cost is a little above the quoted APR.
Frequently asked questions
Why is APY higher than APR?
APY includes interest on interest. The more often compounding happens, the bigger the gap.
Does APR include fees?
On loans, APR includes some fees by law. On savings, APR and the nominal rate are the same thing.
This is not financial advice. Nothing on this site is investment, tax, legal or financial advice of any kind.
The calculators give simplified estimates from the numbers you enter. They ignore taxes, fees, rate changes and real market returns, and they can be wrong.
Do not make financial decisions based on these results. Speak to a licensed financial adviser, accountant or lender before acting, and read the full disclaimer.