CalcKitAPR to APY Converter
Convert your rate
APR is the nominal rate a lender quotes. APY is the effective rate after compounding — what you actually earn or pay over a year. Switch the first dropdown to convert the other way.
Example: 5% APR compounded monthly → APY 5.1162%. The same 5% APR compounded daily gives 5.1267%, and compounded continuously gives 5.1271%.
Behind the numbers
How APR becomes APY
APR is the yearly rate before compounding. Each time interest is added, the next period earns interest on a slightly bigger balance — interest on interest. APY folds all of that into one yearly number, so it is the rate that tells you what actually happens over a full year.
n is the number of compounding periods per year (12 for monthly). For continuous compounding, APY = e^APR − 1. To go the other way: APR = n × ((1 + APY)^(1 ÷ n) − 1). For the example: (1 + 5% ÷ 12)^12 − 1 = 1.051162 − 1 = 5.1162%.
A few comparisons
What 5% APR becomes at each frequency
APY for each compounding frequency at the APR you entered. The table updates when you change the rate.
| Compounding | Times a year | APY |
|---|---|---|
| Annually | 1 | 5.0000% |
| Semi-annually | 2 | 5.0625% |
| Quarterly | 4 | 5.0945% |
| Monthly | 12 | 5.1162% |
| Weekly | 52 | 5.1246% |
| Daily | 365 | 5.1267% |
| Continuous | ∞ | 5.1271% |
At 5% APR, monthly compounding earns 0.1162 percentage points more than annual compounding over a year. The jump from daily to continuous is only 0.0004 points — past daily compounding, extra frequency barely matters.
Compare the rate that matters.
For a savings account, compare APY — it is the number that shows what you actually earn in a year.
For a loan, compare APR first, since it includes fees — then check the APY to see the true yearly cost when interest compounds monthly.
A small APY gap is still real money on a big balance: 0.1162 points on $100,000 is $116.20 a year.
Watch for teaser rates. An account can quote a high APY for a few months and then drop it — check how long the rate lasts.
Good to know
Your questions, answered.
What is the difference between APR and APY?
APR is the nominal yearly rate before compounding — the rate a lender quotes on a loan. APY is the effective yearly rate after compounding, the rate that shows what you actually earn or pay over a year. A 5% APR compounded monthly is an APY of 5.1162%, because each month's interest earns interest of its own in the months after it.
Why is APY always higher than APR?
Because compounding adds interest on interest. With monthly compounding, the interest earned in January earns more interest in February, and so on, so the year ends with slightly more than the APR alone would give. The only time APY equals APR is with annual compounding, where interest is added once a year. The more often interest compounds, the bigger the gap.
How does the compounding frequency change the APY?
More frequent compounding means a higher APY for the same APR. At 5% APR, annual compounding gives an APY of 5.0000%, quarterly gives 5.0945%, monthly gives 5.1162%, weekly gives 5.1246% and daily gives 5.1267%. With continuous compounding the APY reaches 5.1271%, the highest possible for a 5% APR.
Which rate should I compare when choosing a loan or a savings account?
Compare APY for savings accounts, because it shows what you actually earn in a year. Compare APR for loans, because lenders are required to quote it and it includes fees — but check the APY too when the loan compounds more than once a year, since the effective cost is higher than the APR suggests.