Interest rates play an important role when deciding where to borrow or invest your money. But interest rates often show up in two ways: an annual percentage rate (APR) and an annual percentage yield (APY). Not sure what means what? Here's the difference between the two and how they're typically used.APY takes into account the compounding nature of interest while APR does not, so APRs tend to be lower than APYs for a given base interest rate. For this reason, banks generally list the APR for debt-related accounts such as credit cards and mortgages, whereas APY often appears next to interest-bearing accounts such as certificates of deposit (CDs) and money market accounts.
Savings 101: Understanding APR vs. APY
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