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APR to APY calculator

APR to APY calculator

Equivalent APY 5.1%

The nominal rate (APR) doesn't account for compounding. The effective annual rate (APY) does — and in real products, so do fees — so it better reflects the true cost or return.

This APR to APY calculator converts a nominal annual rate (APR) into its effective annual rate (APY) based on how often interest compounds, so you can see the real annual cost or return.

APR vs APY

When comparing loans, mortgages or savings accounts, look at the APY, not just the APR: APY includes the effect of compounding (and, in real products, fees), so it’s the number that actually lets you compare products on equal footing.

For guidance only — this conversion doesn’t include fees; on real products the APY can be a bit higher.

FAQ

What's the difference between APR and APY?
APR (the nominal rate) is the stated annual rate on its own. APY (the effective annual rate) accounts for compounding — and, on real products, fees — so it better reflects the true annual cost or return.
Why is APY higher than APR?
Because compounding interest several times a year (say, monthly) earns interest on interest already earned. The more frequent the compounding, the bigger the gap between APY and APR.
Does this include fees?
No. This conversion is pure compounding math; on real loans, deposits or cards, fees can push the true APY a bit higher.