This question is about apr vs apy.

How do you calculate APY?

By Zippia Team - Dec. 7, 2022

The formula for calculating APY is APY = (1+r/n)ⁿ - 1. In this formula, r stands for the interest rate. It should be decimal form rather than percentage form, so you divide the percentage by 100. The variable n represents the number of compounding periods during the year.

This means that you will:

Divide the rate in decimal form by the number of compounding periods in the year.
Add one to that number.
Put the resulting number to the power of the number of compounding periods in a month.
And lastly, subtract one from that number.

As with APR, there are many online calculators that will do the calculations for you if you enter in the necessary variables.

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