APR to APY converter
Turn a headline yearly rate (APR) into what you really earn or pay once interest compounds (APY, or AER in the UK), or work back the other way. Any payment frequency. Free, no sign-up, nothing leaves your browser.
Assumes the rate stays the same all year and nothing is paid in or taken out. Fees and tax aren't included.
APR and APY in plain words
APR is the yearly rate before compounding: the headline number. APY, called AER (annual equivalent rate) in the UK, is what you actually earn in a year once interest is paid on interest. If interest is paid once a year the two are the same; the more often it is paid, the higher APY is than APR.
Why it matters when comparing
Two accounts can quote the same APR and pay different amounts, because one pays monthly and the other yearly. Comparing APY or AER puts them on the same footing. On loans the same maths works against you: interest charged monthly costs more than the APR suggests.
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