Investopedia
The video explains the distinction between APR and APY. APR denotes the annual rate charged for borrowing money, excluding compound interest, whereas APY takes compound interest into account. Investment firms offer products like CDs and retirement accounts that employ APY to lure customers, whereas APR applies to credit products, such as credit cards and mortgages. The difference between the two rates grows with more frequent interest compounding, significantly influencing the amount owed or earned.
In this section, we learn about the differences between APR and APY. APR represents the annual rate charged for borrowing money without considering compound interest, while APY takes into account the compound interest calculation. Investment companies use APY to sell products such as certificates of deposit and retirement accounts. On the other hand, APR is used in credit products such as mortgages and credit cards. The more frequently the interest compounds, the greater the difference between APR and APY, which can significantly affect how much you earn or owe.
No videos found.
No related videos found.
No music found.