APR to APY Converter

How to use this calculator

1. Enter the nominal APR for the deposit product you’re evaluating. Use the figure quoted by the bank or issuer, expressed as a percentage.
2. Enter how many times per year interest is compounded. Common choices are 12 (monthly), 4 (quarterly), 1 (annually), or 365 (daily).
3. The calculator applies the compounding formula to convert from APR to APY.
4. Review the APY result and use it to compare against other products that may quote either APR or APY so that you’re looking at equivalent effective yields.

Inputs explained

APR

Nominal annual percentage rate before compounding. This is the rate often printed in marketing materials or disclosures without specifying the effective yield.

Compounds per year

The number of times interest is credited to the account in a year. Use 12 for monthly, 365 for daily, 52 for weekly, 4 for quarterly, or 1 for annual compounding.

When to use it

• Comparing savings accounts or CDs that advertise nominal APRs but compound at different frequencies, so you can see which one actually pays more over a year.
• Translating APR-based disclosures into APY for customer-facing materials, where regulators or internal standards require yield to be presented as APY.
• Testing what happens if a bank changes its compounding frequency—such as switching from quarterly to monthly or daily compounding—via the effect on APY.
• Checking marketing claims by reverse-engineering whether a quoted APY matches a stated APR and compounding frequency.
• Educating clients or students about the difference between nominal rates and effective yields in the context of deposit accounts.

Tips & cautions

• For most consumer savings accounts, daily compounding (m = 365) is common even if the bank posts interest monthly. Check the account terms to choose an appropriate m.
• At low APRs, the difference between APR and APY is small but still nonzero—especially when compounding is daily. At higher APRs, APY will diverge more noticeably from APR for the same m.
• Keep your units consistent: enter APR as a percentage (for example, 4.5 for 4.5%), not as a decimal; the calculator handles the conversion internally.
• If a product quotes APY instead of APR and you need the nominal rate, use the companion APY-to-APR converter to go in the opposite direction.
• Always confirm rates and compounding rules in official disclosures before making decisions about large deposits or long-term CDs.
• Assumes a single, constant APR and a fixed compounding frequency throughout the year. Step-up rates, teaser periods, or variable rates are not modeled.
• Does not incorporate fees, minimum balance requirements, or tiered rate structures that can reduce effective yield in practice.
• Uses a simplified m value (compounds per year) and does not model day-count conventions or irregular compounding schedules used by some institutions.
• Focuses on deposit products, not loans. For loans, APR has a regulatory definition that includes certain fees; effective cost of borrowing may require different calculations.

Worked examples

Deep dive

FAQs

Is APY always higher than APR?

APY is greater than or equal to APR for a given product. It is strictly higher when interest compounds more than once per year (m > 1). If compounding is annual (m = 1), APY equals APR because there is no intra-year compounding.

What if interest compounds continuously?

Continuous compounding is a mathematical ideal where interest is added at every instant. In that case, APY = e^(APR_decimal) − 1. You can approximate continuous compounding by using a large m (for example, 365 or higher) in this calculator.

Does this calculator account for bank fees or withdrawal penalties?

No. Fees, penalties, and minimum balances can reduce your actual realized yield below the APY shown here. Always review the bank’s fee schedule and account terms to understand how these factors affect your net return.

Can I use this for loans or credit cards?

This tool is designed for deposit products. While the math of APR and APY is similar, loan APR includes additional regulatory requirements and often fees. For borrowing costs, it’s better to use loan-specific calculators that factor in compounding, fees, and payment schedules.

Why does APY matter if my bank already quotes it?

APY makes it easier to compare offerings across institutions. If you encounter marketing that only quotes APR or a rate without describing compounding, this converter lets you generate the APY yourself and do an apples-to-apples comparison.

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