This Business News Story Was Uncovered By Us From: https://www.youngadultmoney.com/2019/02/27/apr-vs-apy/
This selected industry related news Article, was chosen personally by Marcus lee, who is one of our undercover online business News flash reporters – will offer you added insight in how these points of discussion could be translated into your own business ventures.
Interest rate is a key figure to know, whether you’re borrowing money or investing it. But as you shop around for the best financial product for you, you will probably find that two different abbreviations are used to demonstrate the interest rate – APR and APY.
You’re probably familiar with the terms annual percentage rate (APR) and annual percentage yield APY, but what makes them different? Here’s everything you need to know.
So, what’s the difference between APR and APY?
When you open an investment account, you will earn interest. Similarly, when you take out a loan, you will be charged interest. During either of these instances, you will see either the term APR or APY to describe your interest. While these terms are only one letter apart, they offer very different outcomes.
The biggest difference is APR is what you earn annually, without calculating compound interest. Conversely, APY includes compound interest.
This is a huge difference, because compound interest can really work for you if you are saving money, or work against you if you are taking out debt. The way it works is interest compounds, or simply adds up, and is then added to your principal balance. This action is called compounding. This works for you with your investments, because essentially,… Read More
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