APR ↔ APY Converter
Convert Annual Percentage Rate (APR) to Annual Percentage Yield (APY) accounting for compounding frequency. Essential for comparing loans, FDs, savings accounts, and bonds on equal footing.
APR vs APY — Why the Difference Matters
APR (Annual Percentage Rate) is the nominal rate — simple multiplication of the periodic rate by periods. APY (Annual Percentage Yield) is the effective rate — it accounts for compounding within the year. For a 12% APR compounded monthly: APY = (1 + 0.12/12)^12 − 1 = 12.68%. That 0.68% gap means ₹6,800 extra per year on a ₹10L loan or deposit.
Banks quote FD rates as APY/EAR (looks higher) and loan rates as APR (looks lower). Regulatory disclosures in India require XIRR disclosure, which is essentially APY for loans.
APR = n × ((1 + APY)^(1/n) − 1)
Periodic Rate = APR / n
n = number of compounding periods per year
💡 What This Means for You
When comparing two FDs — one at 7.5% compounded quarterly vs another at 7.3% compounded monthly — convert both to APY first. FD1 APY = (1+0.075/4)^4-1 = 7.71%. FD2 APY = (1+0.073/12)^12-1 = 7.55%. FD1 wins despite having fewer compounding periods.
Calculate compound interest growth
Use our Compound Interest Calculator to model FD and savings growth precisely.