APR vs APY — Nominal Rate vs Yield

APR often quotes a simple annual loan rate without fully compounding fees. APY (annual percentage yield) reflects compounding — what you effectively earn or owe after a year of periodic accrual.

Compare apples to apples

When shopping savings, sort by APY. When modeling investments, align compounding frequency with the product.

Use the Interest Calculator to see how frequency changes ending balances at the same nominal rate.