APR means Annual Percentage Rate. It shows the basic interest rate.
APY stands for Annual Percentage Yield. It includes compound interest.
Therefore, APY is always higher than APR. The difference comes from compounding frequency.
Our calculator converts APR to APY accurately. This helps compare financial products properly.
Understanding this difference is crucial. It affects loans, investments, and savings accounts.
This tool helps you see real interest costs or earnings. APR alone doesn't show full impact.
Financial products often advertise APR. However, APY reveals the true annual yield.
Convert rates to make better decisions. Compare credit cards, loans, and investments fairly.
Our calculator is fast, accurate, and free. You'll understand compound growth instantly.
Make smarter financial choices today. See how compounding affects your money over time.
Your Annual Percentage Yield (APY) is:
This is your effective annual rate with compounding
Unlike other calculators, ours provides instant, accurate conversions. We show clear, easy-to-understand results.
Additionally, we explain the difference between APR and APY. This helps users make informed decisions.
Our tool works on any device. It's completely free with no signup required.
Finally, we include educational resources. You'll understand compounding interest better.
Converting APR to APY requires a specific formula. Compounding frequency determines the calculation.
First, divide APR by 100 to get decimal form. Next, divide by compounding periods per year.
Then, add 1 to this value. Raise the result to the power of compounding periods.
Finally, subtract 1 and multiply by 100. This gives you the APY percentage.
Alternatively, use our calculator above. It automates this process instantly.
The mathematical formula for conversion is:
Where:
APR = Annual Percentage Rate (as decimal)
n = Number of compounding periods per year
APY = Annual Percentage Yield (as decimal)
Our calculator uses the standard financial formula. It converts APR to APY accurately.
First, it takes your input APR percentage. Then it considers compounding frequency.
Next, the tool applies the conversion formula. It calculates effective annual yield precisely.
Finally, it displays APY as a percentage. This shows your true annual interest rate.
Consequently, you see the compounding effect. This helps with financial planning.
| APR (%) | Compounding | APY (%) | Difference |
|---|---|---|---|
| 5.00% | Annual | 5.00% | 0.00% |
| 5.00% | Semi-Annual | 5.06% | 0.06% |
| 5.00% | Quarterly | 5.09% | 0.09% |
| 5.00% | Monthly | 5.12% | 0.12% |
| 5.00% | Daily | 5.13% | 0.13% |
| 10.00% | Monthly | 10.47% | 0.47% |
| 15.00% | Daily | 16.18% | 1.18% |
APR is the annual interest rate without compounding. APY includes compound interest effects. Therefore, APY shows the actual annual yield. This difference matters for accurate comparisons.
APY is higher because it includes compounded interest. More frequent compounding increases this difference. Essentially, you earn interest on interest. This boosts the effective annual rate.
Use APR when comparing loan costs. Use APY for savings and investment products. Always compare similar rate types. Otherwise, you might misunderstand true costs or returns.
Yes, higher compounding frequency increases APY. Daily compounding yields more than annual compounding. The same APR produces different APY values. Our calculator shows these differences.
Our calculator provides accurate conversions for standard compounding. However, some products have unique terms. Always verify with your financial institution. Use our results for estimation purposes.