APR to APY Calculator
Convert between APR and APY instantly. See how compounding frequency impacts the effective interest rate on loans and savings.
Your Monthly EMI
โน856
Principal
โน10,000
Total Interest
โน273
Total Payable
โน10,273
Breakdown
Principal: โน10,000 (97%)
Total Interest: โน273 (3%)
Interest-to-Principal: 2.7%
๐ Interactive EMI Breakdown
Principal vs Interest
Year-by-Year Payment Split
Loan Scenario Comparison
| Metric | Your plan | +1% Interest (6.0%) | +12 Months (24mo) |
|---|---|---|---|
| Monthly EMI | โน856 | โน861 โ โน5 | โน439 โ โน417 |
| Total Interest | โน273 | โน328 โ โน55 | โน529 โ โน256 |
| Total Payable | โน10,273 | โน10,328 | โน10,529 |
APR vs APY โ What's the Real Difference?
APR (Annual Percentage Rate) and APY (Annual Percentage Yield) are two ways to express interest rates โ but they tell very different stories. Understanding the difference can literally save you thousands of dollars when comparing loans and savings products.
APR represents the nominal interest rate for a year without accounting for compounding within the year. APY includes the effect of compounding โ how often interest is calculated and added to your balance. For borrowers, APR understates the true cost; APY shows the real cost.
The Conversion Formula
Where n = number of compounding periods per year
(Daily = 365, Monthly = 12, Quarterly = 4, Semi-annually = 2, Annually = 1)
Example: 12% APR compounded monthly:
APY = (1 + 0.12/12)^12 โ 1 = (1.01)^12 โ 1 = 1.1268 โ 1 = 12.68% APY
APR vs APY Comparison Table
| APR | Compounding | APY | Difference |
|---|---|---|---|
| 5% | Monthly | 5.116% | +0.116% |
| 6% | Monthly | 6.168% | +0.168% |
| 8% | Monthly | 8.300% | +0.300% |
| 10% | Daily | 10.516% | +0.516% |
| 12% | Monthly | 12.683% | +0.683% |
| 18% | Monthly | 19.562% | +1.562% |
| 20% | Daily | 22.134% | +2.134% |
| 25% | Daily | 28.400% | +3.400% |
Which to Use When?
- Shopping for a loan? Compare using APY โ it shows the true cost. A credit card advertising "15% APR (monthly compounding)" actually costs you 16.08% APY
- Shopping for savings? Banks advertise APY (the higher number). Compare savings accounts and CDs using APY for apples-to-apples comparison
- Mortgages: The federally mandated APR for mortgages includes fees โ making it higher than the note rate. The effective monthly rate (APY equivalent) further adjusts for compounding
Credit Card APR โ The Real Story
Credit cards typically compound daily. A card stated as 20% APR compounds daily at 20%/365 = 0.0548%/day. The true annual cost:
On a $5,000 balance carried for a full year: interest cost = $1,107 (not $1,000 as APR implies)
References
- Federal Reserve โ Truth in Lending Act (TILA) / Regulation Z
- Federal Truth in Savings Act (TISA) โ requires banks to disclose APY
- Consumer Financial Protection Bureau (CFPB) โ consumerfinance.gov