# APY Calculator (APR to APY)

URL: https://speedycalculator.com/calculators/finance/apr-to-apy/
Last updated: 2026-10-25

> The APY calculator converts a nominal interest rate (APR) into the annual percentage yield for any compounding frequency, and shows how much a deposit grows over the term.

## Inputs

- Annual percentage rate (APR) (%)
- Compounding frequency
- Initial deposit
- Term (years, months)

## Results

- Annual percentage yield (APY)
- Final deposit
- Interest earned

## Formula

```
APY = (1 + APR ÷ n)^n − 1
Continuous compounding: APY = e^APR − 1
Final balance = deposit × (1 + APY)^years
```

## Explanation

Banks advertise savings accounts by APY because it includes compounding; loans are usually quoted by APR. The more often interest compounds, the higher the APY for the same APR.

### How to use the APY Calculator

- **Annual percentage rate (APR)**
- **Compounding frequency**
- **Initial deposit**
- **Term**
- Every result field is editable: type into **Annual percentage yield (APY)** and **Annual percentage rate (APR)** plus every other field update to match.

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the APR, the compounding frequency, the deposit and the term.

### Tips

- Use the nominal annual rate and pick the compounding frequency your bank or broker states.
- Small differences in return or fees compound into large differences over decades.
- Run the calculation with a cautious, a central and an optimistic return to see the range of outcomes.
- Past returns do not guarantee future returns – nothing here is investment advice.

### Common mistakes to avoid

- Comparing an APR with an APY or effective rate.
- Ignoring inflation, taxes and fees when judging a real return.
- Entering a percentage as a decimal (5 instead of 0.05 is correct here).

### Inputs explained

FieldWhat to enterAnnual percentage rate (APR)In %Compounding frequencyChoose one: Yearly, Semi-annually, Quarterly, Monthly …Initial depositAmount in your currencyTermUnits: years, months

### What each result means

- **Annual percentage yield (APY)** = effr([Annual percentage rate (APR)]÷100, [Compounding frequency])×100
- **Final deposit** = [Initial deposit]×(1 + [Annual percentage yield (APY)]÷100)^[Term]
- **Interest earned** = [Final deposit] - [Initial deposit]

### Example values

How the main result changes when **Annual percentage rate** changes and everything else stays at the example values above:

Annual percentage rate (APR) (%)Annual percentage yield (APY) (%)2.252.2733.383.4284.54.5945.635.7726.756.96399.381

## Worked example

Inputs — Annual percentage rate (APR): 4.5 %; Compounding frequency: Monthly; Initial deposit: $10,000; Term: 1 years.

Results — **Annual percentage yield (APY) = 4.594 %**; Final deposit = $10,459.40; Interest earned = $459.40.

## FAQ

**What is the difference between APR and APY?**
APR is the simple yearly rate; APY includes the effect of compounding.

**Is daily compounding much better than monthly?**
Only slightly – at 4.5% APR, APY is 4.594% monthly and 4.602% daily.

**Which should I compare for savings?**
APY – it shows what you actually earn in a year.

**What formula does the APY Calculator use?**
APY = (1 + APR ÷ n)^n − 1.


## Sources

- [FDIC – Truth in Savings (APY)](https://www.fdic.gov/)