APY to APR Converter

APR to APY Formula

APY to APR Formula (Inverse)

Where:

• APY: Annual Percentage Yield (as decimal)
• APR: Annual Percentage Rate (as decimal)
• n: Number of compounding periods per year

Annual Percentage Yield (APY)

• • Includes the effect of compounding
• • Shows actual annual return
• • Always higher than or equal to APR
• • Used for savings accounts and investments
• • Standardized calculation method

Annual Percentage Rate (APR)

• • Does not include compounding effects
• • Simple annual interest rate
• • Lower than or equal to APY
• • Used for loans and credit cards
• • May include fees and costs

When to Convert APY to APR

• • Comparing savings rates with loan rates
• • Financial modeling and calculations
• • Understanding the base interest rate
• • Academic or theoretical analysis

Important Considerations

• • Higher compounding frequency = bigger difference
• • APY is always ≥ APR for positive rates
• • Both rates are annualized
• • Consider fees and terms in real scenarios