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What is the Annual Percentage Yield (APY) and why is it sometimes different that the Annual Percentage Rate (APR)?

April 26, 2017annual Annual Percentage Rate Apr APY different PERCENTAGE yield

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What is the Annual Percentage Yield (APY) and why is it sometimes different that the Annual Percentage Rate (APR)?

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The APY refers to the total return that you will receive in one year if you deposit your interest earned on an interest bearing account and not withdrawal the interest. If you withdrawal the interest you will receive only the APR on the account because you will not enjoying compounding of money. The APR is typically lower than the APY because of the lack of compounding.