What is the difference between APR and APY?

APR represents the yearly rate charged for borrowing money. It includes fees but not including compounding. APY refers to how much interest you'll earn on savings and it takes compounding into account. The difference between APR and APY increases as interest is compounded more frequently. Banks and investment companies generally advertise the APY.

What does Apr mean on a credit card?

APR refers to the annual percentage of interest that consumers pay on credit cards or any other type of loan. The APR is separate from the interest rate charged. The APR represents the total annual cost of borrowing, which includes the interest rate plus certain additional fees charged for the loan.

How does Apr differ from simple interest?

You are likely paying it monthly or an even more frequent payment schedule, depending on the loan. APR differs from simple interest because it includes a number of fees on top of the interest rate. This is why you will see different numbers when you compare interest rates and APR.