Quick answer
APR (annual percentage rate) is the yearly rate without compounding; APY (annual percentage yield) includes compounding. Banks quote APY on savings (it looks higher) and APR on loans (it looks lower). APY = (1 + APR/n)n − 1.
APR to APY conversion table
| APR | APY (monthly compounding) | APY (daily compounding) |
|---|---|---|
| 1% | 1.005% | 1.005% |
| 3% | 3.042% | 3.045% |
| 5% | 5.116% | 5.127% |
| 8% | 8.300% | 8.328% |
| 12% | 12.683% | 12.747% |
| 18% | 19.562% | 19.716% |
| 24% | 26.824% | 27.115% |
Why it matters
- Comparing savings accounts: always compare APY, since it shows what you actually earn.
- Comparing loans: compare APR, which also includes most fees — see our apr calculator to find the true APR of a loan with fees.
- Credit cards: a 24% APR with daily compounding costs you about 27.1% a year if you carry a balance — plan payoff with the credit card payoff calculator.
Written by the Calcivia editorial team following our editorial policy. Educational information, not financial advice.
Was this page helpful?