These days you usually get APY (annual percentage yield) from banks, but there are some times when you want the APR (annual percentage rate), which does not take into the compounding of interest as it is earned. For some reason I could not find an APY to APR calculator online, so… I made one myself. Here are the definitions that the calculator is based on:
APR = PeriodicRate x Periods in a Year
APY = (1 + PeriodicRate)^(Periods in a Year) – 1
After some basic alegbra:
APY to APR Calculator:
As you would expect, the less periods the closer APR is to APY. You’ll note that there is very little difference between daily compounding and monthly compounding. This was explained previously in my post ‘Interest Compounded Daily vs. Monthly: Does It Matter?‘.
The idea for this came up because I am working on another calculator which will estimate the APY of T-Bills, given the interest rate (APR) of the bank account you place the uninvestable interest after each maturity.