How to convert APR to APY
✓ Verified in LibreOffice 25.8.7.3Turn a nominal annual rate into the effective yearly rate compounding actually delivers.
The formula
| App | Formula | Notes |
|---|---|---|
| Excel | =(1+A2/12)^12-1 | A2=APR, monthly compounding. Built-in: =EFFECT(A2,12); NOMINAL() goes the other way. |
| Google Sheets | =(1+A2/12)^12-1 | Identical; EFFECT/NOMINAL also available. |
| LibreOffice Calc | =(1+A2/12)^12-1 | Identical. |
How it works
APR quotes the simple annual rate; APY is what compounding makes of it: 6% APR compounded monthly is (1 + 0.06/12)^12 − 1 ≈ 6.17% APY. The gap widens with higher rates and more frequent compounding — a 24% credit-card APR is really 26.8% APY. Swap the 12s for the actual compounding frequency (365 for daily), or use EFFECT(rate, periods) which is this exact formula built in.
Verified, not just documented
We ran =ROUND((1+A2/12)^12-1,4) in LibreOffice 25.8.7.3 (headless, with forced recalculation) and it returned 0.0617 — exactly the expected result. Every formula here is confirmed by actually executing it.