What’s the difference between APR and APY?

APR (Annual Percentage Rate) is the annualized interest plus fees you pay on a loan. APY (Annual Percentage Yield) is the interest you receive on a deposit account, such as a savings account, expressed as an annual percentage and including compound interest.

What’s considered a “good” APR will depend on your credit score, the interest rate on the loan, or any competing rates offered in the market. You should also consider the repayment terms, whether you’re receiving an introductory rate, and if you’ll have a higher APR in the future.

What is APR on a credit card?

APR is the total amount you’ll pay to borrow money with a credit card. A credit card APR is much higher than what you’ll receive on other types of lending products because credit card interest rates are so high. Because of this, it’s a good idea to pay your credit card bill in full each month if you’re able.

Annual Percentage Rate (APR): Explained