How to use
- Choose a direction. To see what a quoted rate actually earns in a year, use APR → APY. To find the nominal rate behind an advertised yield, use APY → APR.
- Enter the rate and pick how often interest compounds — annually, semiannually, quarterly, monthly, weekly, daily or continuously.
- Add a deposit amount to see one year of interest and the ending balance.
- The table shows the same rate converted for every compounding frequency.
APR vs. APY
- APR (annual percentage rate) is the nominal yearly rate, before compounding. A 6% APR compounded monthly credits 6% ÷ 12 = 0.5% each month.
- APY (annual percentage yield) includes compounding — interest earning interest — so it is the actual growth over one year.
| Conversion | Formula (n = compounding periods per year) |
|---|---|
| APR → APY | (1 + APR ÷ n)ⁿ − 1 |
| APY → APR | n × ((1 + APY)^(1/n) − 1) |
| Continuous compounding | APY = e^APR − 1, APR = ln(1 + APY) |
With annual compounding APR and APY are equal; the more often interest compounds, the higher the APY.
Example: a 5% APR
| Compounding | APY |
|---|---|
| Annually | 5.0000% |
| Semiannually | 5.0625% |
| Quarterly | about 5.0945% |
| Monthly | about 5.1162% |
| Daily (365) | about 5.1267% |
| Continuously | about 5.1271% |
A savings account paying 4.5% APR compounded daily has an APY of about 4.6025%, so 10,000 earns about 460.25 in a year instead of 450.
Things to keep in mind
- Results are for reference only. In the US, the Truth in Savings Act requires banks to disclose APY on deposit accounts, so the APY on a savings offer already includes compounding.
- For loans, the APR disclosed under the Truth in Lending Act can include certain fees on top of interest. This calculator treats APR as a pure interest rate with no fees.
- Taxes on interest are not deducted.
- To project savings over several years with regular deposits, use the compound interest calculator; for interest that does not compound, try the simple interest calculator.
FAQ
How much does compounding frequency matter?
Less than most people expect. At a 5% APR, daily compounding beats monthly by only about 0.01 percentage points. The rate itself matters far more.
Which should I compare when shopping for savings accounts?
Compare APYs — they put accounts with different compounding schedules on the same footing. For loans, compare APRs that include fees.
Is anything I enter saved or sent anywhere?
No. All calculations run in your browser.