Effective Annual Rate Calculator (APR to APY)
Converts a stated rate into what you actually pay or earn in a year.
Share sends a link that reopens these numbers. Copy details pastes the full breakdown as a list.
The formula
EAR = (1 + r/n)^n − 1
The nominal rate ignores interest on interest. The effective rate includes it, which is why it is the fair way to compare products.
What to watch out for
Compare savings and loans on the effective rate, because two products with the same nominal rate can compound differently.
Frequently Asked Questions
What is the difference between APR and APY?
In US usage, APR is the nominal yearly rate and APY includes compounding. 12% APR compounded monthly is 12.68% APY. In the UK and EU, APR is already an effective rate that includes fees, so it should not be converted again.
How do I convert nominal to effective rate?
Divide the rate by the number of periods, add 1, raise it to the number of periods, and subtract 1.