APR to APY Calculator
Convert a nominal interest rate (APR) into the effective yearly rate (APY or AER).
APY or AER
Extra yield over the APR
The formula
APY = (1 + APR / n)^n - 1, where n is how many times a year interest compounds (12 for monthly, 365 for daily).
Example: a 5% APR compounded monthly equals a 5.12% APY. The more often interest compounds, the higher the APY.
Frequently asked questions
Why is APY higher than APR?
Because interest earns interest during the year.
Is APR the same on loans?
On loans, APR may also include fees, so it can differ from the simple rate.
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Last updated October 2026. For information only, not financial advice.