The interest you will pay or receive for the entire year. APR is a simple calculation for the year, whereas APY (synonym: EAR) takes into account compounding interest, which makes it a more intricate (and, typically, more accurate) calculation. That’s the only difference. As you know, companies sneakily market interest rates all the time. If APR is 10% and APY is 10.5%, it would make sense that a bank that wants you to use its credit card will use APR (it appears lower) and then use APY (it appears higher) for savings accounts. Both essentially refer to the same thing. They are just different ways to present it.
« Back to Glossary Index
A simple 12-step plan to leap over the wealth gap once and for all.
