APR to APY Converter

Loans & Borrowing

Updated Apr 2026 • Has calculator

Converts a nominal Annual Percentage Rate (APR) to Annual Percentage Yield (APY), accounting for compounding.

What is APR to APY?

The Annual Percentage Rate (APR) is the nominal annual rate without accounting for compounding within the year. The Annual Percentage Yield (APY) is the effective rate that includes compounding, and is always higher than (or equal to) APR. Banks advertise APR on loans (making the rate look lower) and APY on savings accounts (making returns look higher). Monthly compounding is the most common, though daily compounding is used for savings accounts and some credit cards.

Formula

APY = (1 + APR/n)^n − 1

Worked Example

2024

Step 1 Savings account advertised APR: 5.00%

Step 2 Compounding: daily (n = 365)

Step 3 APY = (1 + 0.05/365)^365 − 1 = (1.0001370)^365 − 1

Step 4 APY ≈ 5.1267%

Step 5 → On $100,000 deposit: earn $5,127 vs $5,000 with annual compounding

Source: CFA Institute — Fixed Income, 7th ed., Ch. 1 (2024-01-01)

Calculate APR to APY

APR (Nominal Rate)

Nominal annual interest rate (as advertised)

Compounding Frequency

1=annually, 2=semi-annually, 4=quarterly, 12=monthly, 365=daily

APY (Effective Rate)

—

Not investment advice.

How to Interpret APR to APY

< 2

Low rate — typical money market or CD

2 – 5

Moderate — competitive savings/CD rate

5 – 10

High — top-tier savings or short-term bonds

> 10

Very high — typically associated with higher-risk products

📚 DeFi Basics — Complete the path

Sources