APR Calculator
Calculate the effective annual yield (APY) from a nominal APR and compounding frequency.
How This Works
APR is the stated nominal annual rate, without accounting for compounding within the year. APY (also called effective annual rate) shows what that rate actually yields once compounding is factored in — APY is always equal to or higher than APR, and the gap grows with more frequent compounding.
Formula
where n = compounds per year
Example
A 5% APR compounded monthly yields about 5.116% APY — the more frequent the compounding, the bigger that gap becomes.
Frequently Asked Questions
What is the APY for a 5.00% APR compounded 12 times a year?
5.116%.
Why is APY higher than APR?
Because APY accounts for interest earning interest within the year (compounding), while APR is just the stated nominal rate without that effect.