Question 1

What's the difference between APY and APR?

Accepted Answer

APR is the simple annual interest rate. APY (annual percentage yield) reflects the effect of compounding within the year and is always equal to or higher than APR.

Question 2

When should I compare APY vs. APR?

Accepted Answer

Compare APY for savings products (CDs, savings accounts) and APR for loans (mortgages, credit cards). Banks generally quote APY for deposits and APR for borrowing.

Question 3

Why do they differ?

Accepted Answer

If interest compounds n times per year, APY = (1 + APR/n)^n − 1. The more frequent the compounding, the larger the gap.

Question 4

Are these conversions exact?

Accepted Answer

Yes — the math is deterministic. Real rates also depend on day-count conventions and posting rules, but for comparison the formulas hold.

APY to APR Calculator

APY → APR

APR → APY

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