APY (Annual Percentage Yield) and APR (Annual Percentage Rate) are two different ways of calculating the interest on a loan or a deposit account.
APR is the annual rate of interest on a loan or a credit card, which does not take into account the compounding of interest. The APR is the rate that the lender charges to borrow money, including any fees or charges that are associated with the loan.
APY on the other hand, is the annual rate of interest that takes into account the compounding of interest on a deposit account such as a savings account or a certificate of deposit (CD). APY is the rate of interest that the account holder will earn if they leave their money in the account for a year, including the effects of compounding.
In summary, APR is used to calculate the cost of borrowing money, while the APY is used to calculate the interest earned on a deposit account.
