Calculate the Annual Percentage Yield and how it compares with APR with this APY Calculator.
How do you calculate Annual Percentage Yield?
To find the APY for a loan use this formula:
APY = (1+r)p-1
r = Interest Rate per Period (in decimal form)
p = Number of Periods/Year
Example: APY on a loan with a periodic interest rate of .80% and 12 periods per year. (Monthly):
r=.008
p=12
Calculated out, this gives us... (1+.008)12-1 = .1003, or 10.03% APY
But, we're not done yet. Many loans will advertise APR vs APY. APR is Annual Percentage Rate.
APR doesn't take into account the compounding nature of a loan like APY does. With APY, the interest is charged on top of old interest.
This is called compounding interest. Try comparing your answer for APY with the same inputs for APR with the APR Calculator.
You can also learn more about compounding interest by practicing with the Compound Interest Calculator