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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.

Формула

APY = (1 + APR/n)ⁿ - 1, where n is compounding frequency per year

Водич чекор-по-чекор

1Enter APR as a decimal
2Select compounding frequency (daily, monthly, quarterly, annual)
3Calculate APY using the formula

Worked Examples

Влез

APR = 5%, daily compounding

Резултат

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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