APY calculator (APR to APY)

APR and APY are not the same number

APR (annual percentage rate) is the nominal rate before compounding; APY (annual percentage yield) is the effective rate after compounding is applied. The difference is entirely down to how often interest is added. Compound a 6% APR monthly and each month earns interest on the interest already credited, so a year later you have actually earned about 6.17% — that figure is the APY. The more frequently an account compounds, the wider the gap: daily compounding pushes the APY a touch higher still, while a rate that compounds only once a year has an APY equal to its APR.

Why the conversion matters

Banks pick whichever number flatters the product. Savings accounts and CDs are advertised in APY because compounding makes it the larger figure; loans and credit cards are quoted in APR because it looks smaller. That means you cannot compare two offers fairly until they are in the same unit. This tool converts both ways for any compounding frequency: enter an APR to see the APY it really earns, or enter an APY to back out the nominal APR behind it. Type in either field and the other updates instantly. Comparing a monthly-compounding account against a daily-compounding one only makes sense once both are expressed as APY.

Putting the APY to work

Once every offer is on an APY footing, the highest APY genuinely is the better savings rate, all else equal. From there, project what the balance grows to with the high-yield savings calculator or, for a fixed term, the CD calculator — both of which already take an APY as their input. One caveat: a higher APY from much more frequent compounding is real but usually small, so do not let a marginal compounding edge outweigh a meaningfully higher headline rate.

Educational tool only — not financial advice.