# APR vs. APY Calculator Simple Explanation

In very general terms, I always knew the Annual Percentage Rate (APR) and the Annual Percentage Yield (APY) were essentially the same, but there must be some difference. I finally decided to do some research and discovered the below.

APR APY
Definition Annual Percentage Rate Annual Percentage Yield
Main Difference The annual cost of borrowing money that includes fees The rate at which your deposit account can earn money
Account Types
• Credit Cards
• Mortgages
• Savings Account
• Certificates of Deposit
Formula APR = ( ( ( ( Fees + Interest Paid over Life of Loan ) / Loan Amount ) / Number of Days in Loan Term ) * 365 ) * 100
APY = ( 1 + (r/n) )^n – 1
r = annual interest rate
n = the number of times interest compounds per year

 Balance \$ APR (%) Days in Month 28293031 Days in Year 360365366 Interest Per Day \$ Interest Per Month \$ Interest Per Year \$
 Balance \$ APY (%) How much you gain depends on how often the amount compounds Below you’ll see how much you’ll get at the end of a year (assuming 365 days in a year) Balance Compounded Daily \$ Balance Compounded Monthly \$ Balance Compounded Annually \$