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About this tool
Convert a nominal APR into its effective APY based on the compounding frequency.
The APR-to-APY Converter turns a nominal annual percentage rate into the effective annual yield using APY = (1 + APR ÷ n)^n − 1, where n is the number of compounding periods per year, or APY = e^APR − 1 when you switch on continuous compounding. It reports the APR, the resulting APY and the uplift between them in percentage points, all to six decimal places. It exists because two accounts quoting the same headline rate can pay different amounts once compounding frequency differs.
Open APR-to-APY Converter on AltFTool — it loads instantly in your browser.
Enter the Nominal APR (%) and Compounds per year (12 for monthly, 4 for quarterly, 365 for daily), or apply the 12% monthly preset.
Tick the Continuous compounding toggle (Use e^APR instead of periodic compounding) when a model or contract specifies it — the result recalculates instantly.
Read the Effective APY to six decimal places alongside the Nominal APR and Effective uplift rows in percentage points, and use the Copy button to grab the summary.
Results are shown to six decimal places, enough to see the difference between quarterly and monthly compounding on the same nominal rate.
Alongside the APY it reports how many percentage points compounding adds over the nominal APR, which is the number that actually decides between two offers.
A single toggle switches from the periodic formula to e^APR − 1, the theoretical upper bound used in options and fixed-income maths.
APR is the nominal rate ignoring compounding within the year; APY is what you actually earn or pay once interest compounds. At 12% APR compounded monthly the APY is 12.682503%, an uplift of about 0.68 percentage points over the headline figure.
APY = (1 + APR ÷ n)^n − 1, with the rate as a decimal and n the compounding periods per year — 12 for monthly, 4 for quarterly, 365 for daily. With n = 1 the APY equals the APR, because there is no intra-year compounding.
Less than most people expect. A 12% nominal rate gives 12.682503% APY compounded monthly and roughly 12.7475% compounded daily — a gap of about 0.065 percentage points, or ₹65 per ₹100,000 per year.
Use it when a model or contract specifies it, typically in derivatives pricing and academic finance, not for ordinary deposit accounts. Continuous compounding gives e^APR − 1, which is the ceiling any periodic frequency approaches: 12.749685% for a 12% nominal rate. This is an arithmetic conversion, not financial advice — check the compounding basis in your product's terms and talk to a licensed adviser about the decision itself.
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