APR to APY Calculator
APR understates what you earn; APY is the real number. This calculator converts any nominal rate into the effective annual yield for your compounding frequency.
How this calculator works
APY = (1 + APR ÷ n)^n − 1, where n is the number of compounding periods per year. A 6% APR compounded monthly earns 6.168% — the difference is the interest earned on interest. The calculator shows the effective yield and what the compounding bonus is worth on $10,000 in a year.
Frequently asked questions
Why do banks advertise APY and lenders advertise APR?
Each quotes the number that flatters its side: banks want the higher effective yield (APY), lenders want the lower nominal rate (APR). When comparing savings accounts use APY; when comparing loans use APR — never mix the two.
Does daily compounding matter much?
Between monthly and daily compounding the difference is small — at 6% APR, 6.168% vs 6.183%. It matters for large balances, but don't choose an account on daily vs monthly compounding alone; the APY already tells you the answer.
What about continuous compounding?
Continuous compounding is the theoretical ceiling: APY = e^APR − 1. At 6% that's 6.184% — barely above daily. Real accounts compound at most daily, so treat continuous as a curiosity, not a product feature.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.