What is the difference between APY vs. APR rates for investments?


APY, Annual Percentage Yield:

  • APY represents the amount the investor will earn if they allow their interest to compound. This means that the interest earned is added to the investment, converting interest to principal. The invested balance increases, then the dollar amount earned at the same interest rate will be a little higher every month.
  • The interest rates published on our website are APY, Annual Percentage Yield. We do this to help you compare interest rates with other banks and investment managers. APY is the rate that banks and investment managers publish in most of their advertising and rate offerings.

APR, Annual Percentage Rate

  • APR, Annual Percentage Rate, will always be less than APY. APR is the actual rate used to calculate how much interest you will earn. This is the rate on your statements, maturity notices, or any other communications specific to your investment accounts.
  • APR represents the annual percentage interest rate paid to investors.

What will I actually earn on my investment?

  • If you choose to compound your interest, or let it be added to your investment every month, then you will earn APR.
  • If you choose to receive a payment every month for your interest earned, then you will earn APY.