Asking for a Friend - What's the difference between APR and APY?

May 1, 2023

Question: I feel like I should know this, but I don’t - what’s the difference between APR and APY?

Answer: Never “should” on yourself. We weren’t born to know this stuff!

  • APR = Annual Percentage Rate - this is the interest rate plus any other borrowing costs, meaning this is what you pay.

  • APY = Annual Percentage Yield - this is an earnings term, meaning the interest you earn on your investment.


Do your friends ask you financial questions?
Pass those questions on to us at AskRPG@rootedpg.com and we will feature them in our future newsletters.