Convert a nominal rate (APR) into the effective annual rate (APY) for a given compounding frequency. Enter the rate and frequency.
Effective APY
— %
True annual yield.Usage Tip
When a rate is advertised, check whether it is APR or APY and how often it compounds — that determines what you actually earn or pay.
THE MATH
APY = (1 + nominal rate / n)^n − 1
n = compounding periods per year
n = compounding periods per year
Nominal rate (APR) is the stated yearly rate; effective rate (APY) accounts for compounding within the year.
They are equal only when interest compounds once a year.
They are equal only when interest compounds once a year.
Savings accounts quote APY (higher); loans quote APR (lower) — same math, opposite incentive.
Daily compounding gives a slightly higher APY than monthly, but the gap is small.
To compare a loan and an investment fairly, put both on the same basis.
Daily compounding gives a slightly higher APY than monthly, but the gap is small.
To compare a loan and an investment fairly, put both on the same basis.