What does compounding turn my APR into?

Convert a nominal annual rate to its effective annual yield for any compounding frequency.

Nominal APR (%)

Compounding frequency

Principal ($, optional)

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APY (effective annual yield)

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Extra yield vs nominal (pp)

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Interest on principal (1 year)

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Effective monthly rate

What's the difference between APR and APY?

APR is nominal, APY is effective — what you actually earn after compounding. APY = (1 + APR/n)^n − 1. 5% compounded monthly = 5.117% APY.

Which should I compare?

Always APY on savings/CDs — it's the honest number. APR is useful for loans where fees may also apply.

Does the frequency matter much?

Beyond monthly the gains shrink: 5% daily vs monthly is only ~0.003 pp. Banks rarely compound better than daily, so monthly-vs-daily rarely changes your decision.