APR to APY Calculator
Convert Annual Percentage Rate (APR) to Annual Percentage Yield (APY) instantly. Understand compound interest and compare the true cost or return of financial products.
Calculate APY
Enter your APR and compounding frequency
Enter your APR as a percentage (e.g., 5.0 for 5%)
More frequent compounding = Higher APY for the same APR
Quick Examples
Annual Percentage Yield (APY)
Understanding APR vs APY
APR (Annual Percentage Rate)
- 📊Simple interest rate for one year
- ⚡Does not account for compounding
- 📋Required disclosure for loans
- 🏠Used for mortgage rates and credit cards
APY (Annual Percentage Yield)
- 📈Accounts for compound interest
- 💰Shows actual annual return or cost
- ⬆️Higher than APR due to compounding
- 💵Used for savings accounts and investments
Common Use Cases
When to Use APY
- 🏦Comparing savings accounts and CDs
- 📊Evaluating investment returns
- 🧮Understanding compound interest effects
- 💹Calculating effective yields
When to Use APR
- 🏡Comparing mortgage rates
- 💳Evaluating loan costs
- 🛒Understanding credit card rates
- 📝Comparing personal loans
Frequently Asked Questions
❓Why is APY higher than APR?
APY is higher because it accounts for compound interest, where you earn interest on previously earned interest. The more frequently interest compounds, the greater the difference between APR and APY.
⚖️Which should I use for comparison?
Use APY when comparing savings accounts, CDs, and investment products. Use APR when comparing loan products like mortgages, credit cards, and personal loans.
🔄How often does compounding occur?
Compounding frequency varies by financial product - from daily (365x per year) to annually (1x per year). More frequent compounding results in a higher APY for the same APR.
📊What affects the difference between APR and APY?
The compounding frequency and interest rate level affect the difference. Higher rates and more frequent compounding create larger differences between APR and APY.
✅Is APY the same as effective annual rate?
Yes, APY and effective annual rate (EAR) are essentially the same concept - both represent the actual annual return or cost when compounding is taken into account.
🔄How do I convert APY back to APR?
To convert APY to APR, use the formula: APR = n × ((1 + APY)^(1/n) - 1) × 100, where n is the compounding frequency. Our calculator works both ways - enter your APY and see the equivalent APR.
Related Calculators
Ready to Get Started with Your Mortgage?
Understanding APR and APY is just the beginning. Our mortgage experts can help you find the best rates and loan options for your situation.