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
₹856
Principal
₹10,000
Total Interest
₹273
Total Payable
₹10,273
Breakdown
Principal: ₹10,000 (97%)
Total Interest: ₹273 (3%)
Interest-to-Principal: 2.7%
📊 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 | ₹856 | ₹861 ↑ ₹5 | ₹439 ↓ ₹417 |
| Total Interest | ₹273 | ₹328 ↑ ₹55 | ₹529 ↑ ₹256 |
| Total Payable | ₹10,273 | ₹10,328 | ₹10,529 |
APR vs APY — What's the Real Difference?
APR (Annual Percentage Rate) and APY (Annual Percentage Yield) are two ways to express interest rates — 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 — 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 − 1 = (1.01)^12 − 1 = 1.1268 − 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 — 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 — making it higher than the note rate. The effective monthly rate (APY equivalent) further adjusts for compounding
Credit Card APR — 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 — Truth in Lending Act (TILA) / Regulation Z
- Federal Truth in Savings Act (TISA) — requires banks to disclose APY
- Consumer Financial Protection Bureau (CFPB) — consumerfinance.gov