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Key financial terms like APY and APR can be confusing to interpret, especially when factored into the true cost of borrowing money or the parameters of spending it. Whether you are looking for a...
Annual percentage yield (APY) is a normalized representation of an interest rate, based on a compounding period of one year. APY figures allow a reasonable, single-point comparison of different offerings with varying compounding schedules. However, it does not account for the possibility of account fees affecting the net gain.
In simple terms, there are two ways interest rates can be defined and those fall into the camps of interest you pay or the interest you earn. ... APY vs. APR. A good way of understanding the ...
The difference is simple – APR shows what borrowing money costs you. APY shows how much your money is growing when you keep it in an interest-yielding account, like a savings account or CD.
APR represents the yearly cost of a loan, including fees, while annual percentage yield (APY) shows the yearly earnings on an investment, taking compound interest into account.
Converting an annual interest rate (that is to say, annual percentage yield or APY) to the monthly rate is not as simple as dividing by 12; see the formula and discussion in APR. However, if the rate is stated in terms of "APR" and not "annual interest rate", then dividing by 12 is an appropriate means of determining the monthly interest rate.
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The term annual percentage rate of charge (APR), [1] [2] corresponding sometimes to a nominal APR and sometimes to an effective APR (EAPR), [3] is the interest rate for a whole year (annualized), rather than just a monthly fee/rate, as applied on a loan, mortgage loan, credit card, [4] etc. It is a finance charge expressed as an annual rate.