Financial Calculators
APR to APY Converter - Annual Percentage Rate vs Yield
Convert between APR (Annual Percentage Rate) and APY (Annual Percentage Yield) for any compounding frequency. Understand the true cost of loans and actual return on savings accounts.
APY
5.1162%
APR 5.00% compounded monthly = APY 5.1162%
| Frequency | APY |
|---|---|
| Daily (365×) | 5.1267% |
| Weekly (52×) | 5.1246% |
| Monthly (12×) | 5.1162% |
| Quarterly (4×) | 5.0945% |
| Semi-annual (2×) | 5.0625% |
| Annual (1×) | 5.0000% |
APR vs APY
APR (Annual Percentage Rate) is the simple annual interest rate, not accounting for compounding within the year. APY (Annual Percentage Yield) accounts for compounding and shows what you actually earn or owe over a year.
APY = (1 + APR/n)ⁿ − 1
where n = number of compounding periods per yearCompounding frequency effect
| APR | Compounding | APY |
|---|---|---|
| 5% | Annually | 5.000% |
| 5% | Monthly | 5.116% |
| 5% | Daily | 5.127% |
| 20% | Monthly | 21.939% |
| 20% | Daily | 22.134% |
When each number matters
- Borrowing (credit cards, loans): use APR to compare costs. Credit cards typically quote APR, but compound daily - the actual cost is closer to APY.
- Saving (savings accounts, CDs): use APY to compare earnings. APY tells you exactly what you earn in a year.
Real-world comparison: savings account
Consider a $10,000 savings account at 5% APR. The difference between compounding frequencies over one year:
| Compounding | APY | Balance after 1 year | Interest earned |
|---|---|---|---|
| Annual | 5.000% | $10,500.00 | $500.00 |
| Quarterly | 5.095% | $10,509.45 | $509.45 |
| Monthly | 5.116% | $10,511.62 | $511.62 |
| Daily | 5.127% | $10,512.67 | $512.67 |
The difference between annual and daily compounding on $10,000 is only ~$12.67 per year at 5% - meaningful at scale but modest at typical savings amounts.
The credit card daily compounding trap
A credit card quoted at 24.99% APR compounds interest daily on any outstanding balance. The effective APY is:
APY = (1 + 0.2499/365)^365 − 1 ≈ 28.40%On a $5,000 balance carried for a full year, that's approximately $1,420 in interest rather than the $1,250 that the APR figure alone might suggest. Always compare credit card costs using APY when carrying a balance.