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Banks quote APY on savings and APR on loans. Convert before you compare.
APY and APR describe the same money two different ways, and banks pick whichever looks better: savings accounts advertise APY because compounding makes it bigger, loans advertise APR because excluding compounding makes it smaller. This converter translates between them at any compounding frequency, so a 5.00% APR loan and a 5.12% APY savings account stop looking like different universes.
Rate shoppers use it when two banks quote different conventions — one advertises APY, another APR — and the comparison is meaningless until both are in the same unit. The $10,000 one-year line turns the abstract rate into dollars.
APR is the nominal annual rate without compounding; APY includes it. At monthly compounding, 5.00% APR works out to 5.1162% APY — the extra 0.1162 points is interest earning interest. The more frequent the compounding, the wider the gap: 22% APR on a credit card compounded daily is really 24.60% APY.
APR = n × ((1 + APY)^(1/n) − 1), where n is the number of compounding periods per year. Example: a savings account advertising 4.50% APY with monthly compounding is paying a nominal 4.4098% APR — the APY looks bigger because it assumes you leave the interest in.
Because APR understates the true cost. A card at 22% APR compounded daily costs 24.60% APY — about 2.6 points more than the number on the statement. Issuers are required to disclose APR under Truth-in-Lending rules, which also fold fees into loan APRs; this converter handles the pure rate math only.