Important Notice: Our web hosting provider recently started charging us for additional visits, which was unexpected. In response, we're seeking donations. Depending on the situation, we may explore different monetization options for our Community and Expert Contributors. It's crucial to provide more returns for their expertise and offer more Expert Validated Answers or AI Validated Answers. Learn more about our hosting issue here.

What is the difference between a quoted APY and interest.What does APY stand for?

April 26, 2017APY Business difference Finance quoted stand

0

Posted

What is the difference between a quoted APY and interest.What does APY stand for?

1 Answer

0

Posted

Gregory got one thing right; Annual Percentage Yield. APR (Annual Percentage Rate) is based on a flat rate. APY takes into account the method of compounding. So if interest is credited every month… it’s caculated on the prorated APR. The following month, because there’s more money (thanks to the previous interest) the same APR is used but you’ll get more interest simply because you’re caculting this on a higher balance. All APY is caculate\d based on the assumption that the new interest is staying in the account. IF YOU WITHDREW THE INTEREST EVERY MONTH…. THE APY and APR would be exactly the same. Gregory’s refrence to “fees” is totally wrong.