APR is the percentage rate, typically for loans, that you’ll pay. It doesn’t include compounding in the percentage.
APY is the percentage yield that you can expect over the year that includes the compounding interest you’ll have earned, typically on an investment.
Easier to think of it was APR is the percentage rate and interest you’ll pu if your borrow money, while APY is how much you’ll earn in interest based on a deposit you make somewhere.
Doorgetter19 t1_jd3zljc wrote
Reply to ELI5: How do high yield savings accounts work? What is APR & APY, and how does compounding quarterly vs monthly vs yearly affect the amount earned? If you open one, how often are there payouts? by mkhrrs89
APR is the percentage rate, typically for loans, that you’ll pay. It doesn’t include compounding in the percentage. APY is the percentage yield that you can expect over the year that includes the compounding interest you’ll have earned, typically on an investment.
Easier to think of it was APR is the percentage rate and interest you’ll pu if your borrow money, while APY is how much you’ll earn in interest based on a deposit you make somewhere.