APR vs APY: Key Distinctions

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APR vs APY Key Distinctions
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What does APY mean?

• The acronym APY refers to annual percentage
  yield.
• It is the cumulative interest you earn on your
  deposits. 

3
Understanding how APY works

• You can calculate APY by applying the formula
  below.
• APY (1 R/N) N 1

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Does APY fluctuate?

• Occasionally, if it is linked to the base rate.

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What does APR mean?

• APR means annual percentage rate.
• It reflects the total cost of borrowing from any
  lender.

6
Understanding how APR works

• You can determine APR by applying the formula
  below.
• APR ((Charges Interest) Actual Borrowing
  Amount) n) 365

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What makes up APR?

• APR includes rescheduling, processing, and
  foreclosure fees.

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• The APR applies to the loan product and informs
  you of the actual borrowing cost. Whereas APY
  reflects the cumulative interest income on bank
  deposits.

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