APR to APY (EAR) Calculator
Enter a nominal annual rate and how often it compounds to calculate the effective annual rate (APY/EAR).
Last updated: September 5, 2026
Frequently asked questions
What's the difference between APR and APY?
APR (annual percentage rate) is the stated nominal rate, without accounting for compounding within the year. APY (annual percentage yield, also called EAR) is the actual rate you earn or pay once compounding is factored in - APY is always equal to or higher than APR when compounding happens more than once a year.
What is 6% APR compounded monthly, as APY?
About 6.1678% - (1 + 0.06/12)¹² − 1 ≈ 0.061678.
Why does more frequent compounding increase the effective rate?
Each compounding period adds interest on top of previously earned interest, so compounding more often (monthly vs. annually, for example) lets that "interest on interest" effect compound more times per year, producing a higher effective annual return even though the nominal APR is unchanged.
Which rate should I use to compare two loans or savings accounts?
APY/EAR - it accounts for compounding frequency, so it's the only rate that lets you fairly compare two products with different compounding schedules (like monthly vs. daily) on equal terms.
What is 24% APR on a credit card, compounded daily, as an APY?
About 27.11% - (1 + 0.24/365)^365 − 1 ≈ 0.2711, illustrating why credit card APY can run noticeably higher than the quoted APR once daily compounding is factored in.
If compounding is annual, does APY equal APR?
Yes - with compounds per year set to 1, the formula (1 + APR/1)^1 − 1 simplifies to exactly APR, since there's no intra-year compounding to create a gap between the nominal and effective rates.
Is 'effective interest rate' the same thing as APY?
Yes - APY, EAR (effective annual rate), and effective interest rate all refer to the same concept: the true annualized return or cost once compounding within the year is accounted for, which is exactly what this calculator computes from a nominal APR.