Tools · Calculator · Beginner

APR to APY converter

The same interest rate can be written two ways. This tool translates between them and shows the arithmetic.

By Protocol Insights editorial teamChecked against 2 sources4 min read

Close-up of calculator keys — Photo: “Dusty calculator” by trekkyandy, CC BY-SA 2.0, via flickr.com. Converted to black and white.

On this page

What is the difference between APR and APY?
How do you use the converter?
How is it calculated?
Worked example: how does 5% APR become 5.116% APY?
How much does compounding frequency matter?
What does this converter not tell you?
What mistakes do people make when comparing APR and APY?
Questions readers ask
Sources

The short version

APR here means the yearly rate before compounding; APY is the yearly yield once interest earns interest.
APY = (1 + APR/n)^n − 1, where n is the number of compounding periods per year.
A 5% APR compounded monthly equals a 5.116% APY; compounded once a year, APR and APY are the same.
For US loans, an APR also folds in certain fees, so it is not a pure interest rate.

APY is the yearly return once interest earns interest; APR is the yearly rate before compounding. Convert with APY = (1 + APR/n)ⁿ − 1, where n is compounding periods per year. A 5% APR compounded monthly equals a 5.116% APY.

Calculator — APR ⇄ APY

APY

5.116%

APR entered

5.000%

Difference

0.116%

Showing the worked example below. Change any number and press Calculate.

What is the difference between APR and APY?

APR (annual percentage rate) in this tool is a nominal yearly rate: the rate per period multiplied by the number of periods, ignoring compounding. APY (annual percentage yield) is what you actually earn over a year if interest is added and then earns interest itself. Regulation DD, the US Truth in Savings rule, sets out the formula banks use for the APY they quote on deposit accounts.

One caution. On US loans, the Consumer Financial Protection Bureau explains that an APR is a broader cost measure: it includes the interest rate plus other charges such as some lender fees. Converting a loan APR that already contains fees with this tool does not give a meaningful yield. The tool is built for nominal rates. Our glossary entry on APR vs APY covers both meanings.

How do you use the converter?

Rate (%). Type the rate you were quoted, for example 5.
Compounding periods per year. Yearly (1), quarterly (4), monthly (12), weekly (52) or daily (365). Use what the product's terms say.
Convert. Choose APR → APY to add the compounding effect, or APY → APR to strip it out.

The result box shows the converted rate, the rate you entered and the difference between them, all to three decimal places.

A financial calculator on a white surface — Photo: “HP-41CX calculator” by Twylo, CC BY-SA 2.0, via flickr.com. Converted to black and white.

How is it calculated?

With r the rate as a decimal and n the compounding periods per year:

APR → APY: APY = (1 + r / n)ⁿ − 1

APY → APR: APR = n × ((1 + r)^1/n − 1)

The first formula compounds the per-period rate r/n over a year. The second runs it backwards: it finds the per-period rate that would grow to the stated APY, then multiplies by n.

Worked example: how does 5% APR become 5.116% APY?

How much does compounding frequency matter?

Compounding	APY from a 5% APR	Gap over APR
Yearly (1)	5.000%	0.000%
Quarterly (4)	5.095%	0.095%
Monthly (12)	5.116%	0.116%
Weekly (52)	5.125%	0.125%
Daily (365)	5.127%	0.127%

Most of the effect arrives by the time compounding is monthly. The size of the rate matters more: compounded monthly, a 1% APR becomes 1.005% APY, a 10% APR becomes 10.471%, and a 20% APR becomes 21.939%. That is why the gap is easy to ignore on a savings account but large on a high-rate loan or an advertised crypto yield.

What does this converter not tell you?

Whether the rate is fixed. The formula assumes the same rate all year and that interest stays in the account. Variable rates break that assumption.
Fees. A fee charged separately is not in the conversion. For loans, compare the official APR disclosures side by side, as the CFPB suggests: APR against APR.
Risk. A yield quoted by a crypto platform or a DeFi lending protocol can change daily, and the asset itself can lose value. Converting it to an APY makes it comparable, not safe.

What mistakes do people make when comparing APR and APY?

Mixing the two. A 5% APR and a 5.1% APY on monthly compounding are almost the same deal.
Using the wrong frequency. Check the product's terms for how often interest is credited.
Projecting many years ahead. For multi-year growth with deposits, use the compound interest calculator.

Questions readers ask

Is APY always higher than APR?

For a positive rate compounded more than once a year, yes. Compounded once a year, the two are equal.

Which number should I compare between savings accounts?

The APY, because it includes compounding and US banks calculate it with the standard Regulation DD formula. Compare APY with APY.

Can I use this for a credit card or loan?

Only to see the effect of compounding on a nominal rate. A US loan APR also includes certain fees, so treat the output as illustrative and compare official APR disclosures instead.

Why does daily compounding barely beat monthly?

Because the extra interest comes from interest earned on interest within each month, which is tiny at ordinary rates: 5.127% against 5.116% for a 5% APR.

Bottom line

APR and APY describe the same rate with and without compounding. Converting puts two offers on the same footing. It does not tell you whether the rate will last or what risks sit behind it, so read the terms as well as the number.

Sources

Consumer Financial Protection Bureau / Electronic Code of Federal Regulations, 12 CFR Part 1030 (Regulation DD, Truth in Savings), Appendix A: Annual Percentage Yield Calculation (2026)Primary source
Consumer Financial Protection Bureau, What is the difference between a loan interest rate and the APR? (2026)Primary source

Educational content only — not financial, investment, legal or tax advice. Crypto-assets are high-risk and you could lose all the money you put in. Rules differ by country; check with your national regulator. See our risk disclosure and editorial policy.