Compound Interest Calculator (APR to APY)

The Compound Interest Calculator below can be used to compare or convert the interest rates of different compounding periods. It calculates the Effective Annual Rate (APY) based on the nominal Annual Percentage Rate (APR) and its compounding frequency.

Enter the Input Interest Rate and its Compounding period to calculate the equivalent APY.

▾ Modify the values and click the Calculate button to use
%
Compounding frequency for the input rate.
(Result shown on next page)

📈 Compound Interest Calculator

(Convert APR to APY & Understand Your Real Earnings)

What Is a Compound Interest Calculator?

This calculator helps you understand how much you actually earn or pay over time when interest is compounded—by converting APR (Annual Percentage Rate) into APY (Annual Percentage Yield).

💡 APR is the nominal rate, while APY shows the real rate you earn (or owe), including compounding effects.

It’s perfect for:

  • 🏦 Savings accounts & CDs

  • 💳 Credit cards & loans

  • 📊 Comparing investments

  • 🔄 Evaluating high-yield accounts

🧮 How to Use This Calculator

Enter the following values:

  1. Annual Interest Rate (APR) – The advertised or stated interest rate

  2. Compounding Frequency – Choose from:

    • Daily

    • Monthly

    • Quarterly

    • Semi-annually

    • Annually

  3. (Optional) Investment/Loan Amount & Term – To calculate total interest over time

Click “Calculate” to get:

  • Effective APY (real interest yield)

  • Total Interest Earned or Paid

  • Total Value at Maturity (if initial amount is entered)

🔁 APR vs. APY — What’s the Difference?

Term Definition Includes Compounding?
APR Annual Percentage Rate – the nominal interest ❌ No
APY Annual Percentage Yield – reflects compound interest ✅ Yes

💡 APY is always equal to or higher than APR—the more frequent the compounding, the higher the APY.

📊 Example Calculation

Let’s say:

  • APR: 5%

  • Compounding: Monthly

  • Initial Deposit: $10,000

  • Term: 1 year

👉 APY ≈ 5.12%
👉 Interest Earned = ~$512
👉 Total Balance = $10,512

Compare this to a non-compounding account, where you'd only earn $500.

📘 Use Cases for This Calculator

  • 📈 Savings & CD Accounts: Compare real returns between banks

  • 💳 Loans & Credit Cards: Understand the true cost over time

  • 🧠 Personal Finance Education: See the power of compounding in action

  • 🔍 APY Shopping: Find which bank or offer gives you the highest actual return

🧠 Smart Financial Tips

  • Always compare APYs, not just APRs—especially when choosing savings accounts or credit cards

  • The more frequent the compounding, the more interest you earn (or owe)

  • Start early: Compound interest rewards time more than rate

  • High-yield savings accounts may offer better APYs than traditional banks

  • Watch for fees—they can erase gains from interest

❓ Frequently Asked Questions (FAQs)

1. Why is APY higher than APR?

Because APY includes the effect of compounding. The more often interest is compounded, the more you earn (or pay), which APR doesn’t reflect.

2. What’s the best compounding frequency?

Daily compounding yields the highest APY, but monthly is most common. Always check the frequency when comparing offers.

3. Can I use this for credit cards?

Yes! This calculator can help you understand how much interest you're really paying—especially on balances that aren’t paid off in full monthly.

✅ Final Thoughts

Don’t just look at the interest rate— understand the real return with our Compound Interest Calculator.

Whether you’re saving, investing, or borrowing, knowing your APY gives you an edge—and could save or earn you thousands over time.

Start calculating smarter today.