How to Calculate APR to APY Converter
What is APR to APY Converter?
APR (annual percentage rate) and APY (annual percentage yield) differ because APY accounts for compounding. APY is always higher and shows the true return on savings or cost of credit.
Formula
APY = (1 + APR/n)ⁿ - 1, where n is compounding frequency per year
Step-by-Step Guide
- 1Enter APR as a decimal
- 2Select compounding frequency (daily, monthly, quarterly, annual)
- 3Calculate APY using the formula
Worked Examples
Input
APR = 5%, daily compounding
Result
APY ≈ 5.127%
(1 + 0.05/365)³⁶⁵ - 1
Common Mistakes to Avoid
- ✕Treating APR and APY as equivalent
- ✕Wrong compounding frequency
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