Annual Interest ↔ Monthly Interest Rate Converter
Convert between annual, monthly, and daily interest rates — for both simple and compound interest. Understand APR vs APY and the true cost of any loan or return on any deposit.
APR vs APY — Why They’re Different
APR (Annual Percentage Rate) is the simple annual rate — just multiply the periodic rate by the number of periods. APY (Annual Percentage Yield) accounts for compounding — the interest earns interest. For a 1% monthly rate: APR = 12%, but APY = (1.01)^12 − 1 = 12.68%. That 0.68% difference costs ₹6,800 extra interest per ₹10 lakh per year.
Banks quote FD rates as APY (higher, looks better) but quote loan rates as APR (lower, looks cheaper). Always ask: “Is this the APR or APY?”
Monthly Rate (compound) = (1 + Annual Rate)^(1/12) − 1
APY = (1 + APR/n)^n − 1 [n = compounding periods per year]
APR from monthly rate = Monthly Rate × 12
APY from monthly rate = (1 + Monthly Rate)^12 − 1
Bank A APY: (1+0.072/4)^4 − 1 = 7.40%
Bank B APY: (1+0.07/12)^12 − 1 = 7.23%
Bank A is better despite appearing to have a lower compound frequency!
💡 What This Means for You
For credit card debt at 3% per month: APR = 36%, but APY = (1.03)^12 − 1 = 42.6%. This is why carrying a credit card balance for even a few months becomes extremely expensive. Pay off credit card balances in full every month.
Calculate your total loan cost
Use the Home Loan EMI Calculator to see the full amortisation schedule.